Why must a farmer divest all farming interests?

One of the aims of RAFS was to allow older farmers to retire from farming. In keeping with this, it was necessary for the farmer to dispose of all their farming interests if they wished to participate in RAFS.

Requirement to divest all farming interests


Section 49A(1) VEA - Requirement for qualifying farmer

Section 49A(2) VEA - Requirement for

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Where both the retiring farmer and partner owned the farm enterprise, both partners must have divested all their farming interests.

Where the retiring farmer and another person owned the farm enterprise in a partnership arrangement, only the retiring farmer and their partner was required to divest his or her share.    

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Divesting farmer's share of farm partnership

5.5.7/Assessment of Farm Value

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Shares must be divested

Shares or units held in farming co-operatives essential to the running of the farm enterprise and shares that the farmer owned in other farms were required to been divested.

A farmer who owned or had shares in more than one farm was required to divest all farming interests and properties.

Financial assets must be withdrawn

On retirement a requirement of RAFS that Income Equalisation Deposits, Farm Management Deposits, etc, be withdrawn. The rules of these schemes do not allow the deposits to be transferred to another person.

If the farmer withdrew the deposit and subsequently gave the cash away, the amount given away could not be disregarded under RAFS as it was not a transfer of a farm asset.  That is, deprivation rules were and are applicable to such gifts. Farm encumbrances must have been transferred

Any farm encumbrances, such as mortgages and overdrafts that were taken into account in working out the net value of the farm enterprise, must have also been transferred.

Home and curtilage exemptions from divesting rules


The only exemption to the requirement to divest all farming assets was the dwelling house and curtilage on the farm.    

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Retaining the dwelling and curtilage

5.5.7/Retaining a Life Interest

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