More of a damp squib than a ‘Eureka Bud­get’

Irish Examiner - Farming - - NEWS -

From a farm­ing per­spec­tive, the pro­nounce­ment of Bud­get 2018 passed off as a damp squib rather that a eureka mo­ment.

The good­ies came in the form of an in­crease to the “earned in­come tax credit” avail­able to the self-em­ployed in­clud­ing farm­ers who oth­er­wise do not ben­e­fit from a PAYE tax credit.

The in­crease in the earned in­come credit to €1,150 falls far short of pre­vi­ous com­mit­ments by Fine Gael to in­crease the Earned In­come Tax Credit from €550 to €1,650 for the self-em­ployed, to match the PAYE credit, by 2018.

Hav­ing started well in 2016 at a rate of €550, it was ex­pected that suc­ces­sive bud­gets in 2017 and 2018 would in­cre­men­tally rise the credit by €550 each year. The credit was in­creased by €400 for year 2017, and by a rel­a­tively small amount of €200 for 2018.

Also in the in­come tax area, per­sons earn­ing more that €33,800 will ben­e­fit from the in­crease in the lower rate tax band to €34,550, the tax sav­ing here will be €150. Look­ing at USC, farm­ers will ben­e­fit from the re­duc­tions in the rates of Uni­ver­sal So­cial Charge. A farmer earn­ing €40,000 tax­able prof­its per year will save a mod­est €103 in USC. There were no changes to the rates of PRSI.

A new carve-out was an­nounced in re­spect of farm­ers en­gag­ing in so­lar en­ergy projects.

Un­der cur­rent rules, a farmer who en­gages in a lease with a so­lar de­vel­oper could for­feit their abil­ity to pass on that land, or sell that land ex­empt from CGT. Sim­i­larly, ben­e­fi­cia­ries Char­tered tax ad­viser Kieran Cough­lan, Bel­go­oly, Co Cork. (086) 8678296

who re­ceive a gift of land oc­cu­pied by so­lar pan­els would not be able to claim agri­cul­tural re­lief, mean­ing that gift or in­her­i­tance tax could ap­ply at 33% on the value of the prop­erty.

The bud­get doc­u­ments an­nounced that ‘for the pur­pose of CAT agri­cul­tural re­lief and CGT re­tire­ment re­lief, agri­cul­tural land placed un­der so­lar in­fra­struc­ture will con­tinue to be clas­si­fied as agri­cul­tural land, but with a con­di­tion re­strict­ing the amount of the farm­land that can be used for so­lar in­fra­struc­ture to 50% of the to­tal farm acreage’. The Fi­nance Bill and sub­se­quent Fi­nance Act should pro­vide clar­ity on how this new re­lief will ap­ply.

One of the ma­jor tax in­creases an­nounced by the bud­get is the rise in the rate of com­mer­cial stamp duty from 2% to 6%. Com­mer­cial stamp duty rates ap­ply also to farm land trans­ac­tions, mean­ing that the pur­chase of farm land will be more ex­pen­sive, be­cause of the in­creased stamp duty cost.

The new rate ap­plies in re­spect of trans­ac­tions com­pleted on or af­ter Oc­to­ber 11. In the Dail on Tues­day even­ing, an amend­ment pro­posed by In­de­pen­dent TD Michael Fitz­mau­rice, which would ex­clude agri­cul­tural land from the in­crease, was de­feated, when 64 TDs voted in favour of the 6% com­mer­cial stamp duty, with 31 in op­po­si­tion and a fur­ther 41 ab­stain­ing.

The gov­ern­ment hopes to raise €375 mil­lion from the stamp duty in­crease.

The Gov­ern­ment have clar­i­fied that the re­duced rate of stamp duty of 1% ap­pli­ca­ble to trans­fers be­tween cer­tain rel­a­tives (trans­feror un­der 67) will con­tinue to ap­ply un­til 2020. The ex­emp­tion from stamp duty for young trained farm­ers also con­tin­ues to ap­ply.

A ma­jor dis­ap­point­ment imn the Bud­get was the fail­ure to pro­vide a farm de­posit scheme to ad­dress the in­come volatil­ity which has be­come much more pro­nounced in re­cent years.

With the prospect of Brexit hav­ing a se­vere im­pact on farm in­comes in the com­ing years, it was par­tic­u­larly dis­ap­point­ing that mea­sures weren’t in­tro­duced now to fa­cil­i­tate farm­ers tak­ing proac­tive mea­sures to pro­tect their in­come. Like­wise, there was an op­por­tu­nity to al­low farm­ers and other self-em­ployed per­sons write off ex­pen­di­ture on as­sets over a time-frame that suited their busi­ness needs, rather than the pre­scribed eight-year pe­riod. But there was no move­ment on this. Farm­ers will again get ac­cess to a low cost loan scheme dur­ing 2018, a re­peat of the hugely suc­cess­ful and much over-sub­scribed Agri Cash­flow Sup­port Loan Scheme. An in­crease in the Na­tional Train­ing Fund levy of 0.1% will add to em­ployer costs. The Na­tional Train­ing Fund levy is ef­fec­tively in­cor­po­rated into the em­ployer’s rate of PRSI of 10.75%.

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