The IFA Pre-Budget Submission 2017 calls for short term measures to directly support farm incomes and long term measures to tackle income volatility.
- Funding of €250m for agri-environment schemes in Budget 2017, with full payments for all GLAS, AEOS and organic scheme participants.
- Introduction of a targeted sheep scheme of €25m, with minimal costs and bureaucracy on farmers, to maximise its benefits.
- Increased funding for the ANC scheme, commencing the process of reversing the cuts to ANC payments in past budgets.
- Immediate reopening of the Beef Data and Genomic Programme to allow new participants, with additional funding of €25m to increase support for the suckler cow.
- A funding allocation of €50m to the TAMS II programme to meet the demand across all farming sectors for on-farm investment.
- To maximise the number of farmers using income averaging, the current restrictions on eligibility where the farmer’s spouse is in self-employment must be removed.
- Income averaging to be amended to provide extra flexibility in a year when income falls significantly – see below.
- Earned Income Tax Credit to be increased to the same level as the PAYE credit in 2017.
- Extension of CGT Farm Restructuring Relief beyond end 2016.
- Taxation incentives for investment in energy efficient equipment and diversification into renewable energy.
Income Averaging Proposal
IFA proposes 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 five years’ income. The underpayment of tax in that year would be carried forward and paid over a three year period. IFA proposes that, 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 – full details and examples are available here