Specific Details
Agri Taxation - IFA 2017 Budget Submission
Intended results
To tackle income volatility:
- Extension of income averaging where farmer’s spouse is self-employed - where a spouse of a farmer has a fully separable source of income from self-employment, income averaging should be allowed on the farm profits.
- Individualising income averaging through temporary opt-out - that a farmer on income averaging is permitted, in a year when farm income falls significantly, to pay the tax due for a single year only on the actual income earned in that year, rather than the average tax due arising from the previous five years’ income. The underpayment of tax in that year would be carried forward and paid over a three year period.
Over a five year period, the farmer would have the option of using his actual income as the basis for his tax payment on two occasions.
While the scheduling/timing of the tax payment would differ, the total amount paid to the Revenue Commissioners would remain the same. The farmer would pay higher tax in the years following the opt-out, than if he had not opted out, but this should be at a time of higher income, and therefore greater ability to meet this tax payment
Removing discrimination in the income tax system - Earned Income Tax Credit - with reference to the commitment in the Programme for Government to increase the Earned Income Tax Credit from €550 to €1,650 for the self-employed, to match the PAYE credit, by 2018. Given the positive exchequer returns in 2016, there is scope to introduce this for 2017 in October’s budget.
Farm Transfer and Restructuring - Agricultural Relief and CAT Values - that the retention of 90% Agricultural and Business Relief is critical to support the transfer of family farms and other small businesses. In addition, to ensure that farms of a viable size can continue be transferred, IFA supports the commitment in the Programme for Government to increase the Category A threshold (parent and child) in future budgets.
CGT Restructuring Relief - that the CGT Restructuring Relief measure should be extended past the current expiry date of end 2016. While recognising that it is a measure that applies to a small number of farmers, its retention is important. Where the opportunity arises to restructure a farm through land disposal and re-purchase, it is of huge benefit to that individual, and can significantly improve both the financial and environmental efficiency of that holding.
Stamp Duty Consanguinity Relief for Registered Farm Partnerships - that stamp duty consanguinity relief (1% stamp duty) is extended to farm transfers that are undertaken within the structure of a Registered Farm Partnership.
Land Leasing tax exemption between siblings - that the land leasing tax exemption scheme should be extended to leases between siblings, but with restrictions in place to ensure that it continues to be used in genuine circumstances only.
In particular, IFA proposes that where the lease is between siblings, only one sibling can avail of the income tax exemption – i.e. there can be no situation whereby two farmer siblings lease land to each other and avail of the income tax exemption.
CGT Relief on Farm Partnership dissolution - that, in order to continue to encourage farmers to enter into farm partnerships, the Joint Tenancy Ownership Relief from Capital Gain Tax that was available until December 2013, where there was the dissolution of a farm partnership, should be reinstated.
Aquaculture – implementing the proposals of the marine taxation review -that the extension of Agricultural Relief to the marine sector, including aquaculture, must be implemented in Budget 2017.
Farm Investment - Accelerated Capital Allowance for investment in energy efficient equipment - that the extension of the SEAI accelerated capital allowances scheme for investment in energy efficient equipment to sole traders, as proposed in the Agri-taxation review 2014 and Marine Taxation Review 2016, would be a progressive move to encourage on-farm investments and improve the overall efficiency of farming enterprises.
Incentivising farm level renewable energy initiatives:
For farmland used for solar power generation, - that land leased on a long-term basis to a solar panel enterprise, where the land is also used in the trade of farming, must qualify for the income tax exemption for long term leasing of farmland
- Where the lease concludes and reverts to the original farmer, CGT Retirement Relief and Agricultural Relief must apply on transfer of the land, subject to the other qualifying conditions being satisfied
- • Where the farmer installs the solar panels on his land and continues to farm the land around the panels (does not lease the land out), this land will qualify for CGT Retirement Relief and Agricultural Relief upon transfer
To further encourage farm-based renewable energy initiatives IFA proposes: A generation feed-in tariff must be introduced for farm-scale renewable energy production, in particular solar, wind and Anaerobic Digestion
- Investment in farm-scale renewable energy initiatives must qualify under the EIIS scheme;
- Income received for the alternative use of farmland for renewable energy projects should receive an income tax exemption, if such income is used for the purposes of re-investment in the farm business; and
- Revenue from the Carbon tax should be ring-fenced for re-investment in and support of renewable energy initiatives.
Changes to excise and licensing regime for small scale cider production:
- that the upper excise band for cider should be removed. The result would be a single rate of duty of €94.46/hectolitre, for all ciders of volume from 2.8%-8.5%;
- an Artisan Cider Manufacturers License should be established for annual production quantities up to 1,000 hL. Such a license would permit both retail and wholesale sales.
Apprenticeship tax credit - that incentives through the tax system are provided for small business employers who take on apprentices in an approved programme. This would be in the form of an income tax credit similar to the Apprenticeship Job Creation Tax Credit scheme currently operating in Canada.
Rejuvenating rural towns and villages:
Support for the proposal in the Programme for Government to introduce a new and improved Town and Villages Renewal Scheme in this year’s budget.
New business start-ups should receive an exemption from rates for an initial time period and with a continuation of the three year tax exemption for start -up companies
• Where businesses establish in rural villages and town centres, they should be eligible to claim double income tax relief on their rental expenditure for their premises.
Did you manage or direct a grassroots campaign?
Yes
What is the directive you gave to the grassroots campaigners?
To lobby all Oireachtas Members on THE Agri-Taxation proposals in IFA's 2017 Budget Submission
Michael McGrath
TD (Dáil Éireann, the Oireachtas)
Charlie McConalogue
TD (Dáil Éireann, the Oireachtas)
Gary Tobin
Assistant Secretary (Department of Finance)