Farmers can avail of Covid-19 tax break for 2019 returns

UP TO €25,000 in exceptional costs and losses related to Covid-19 can be deducted from profits recorded in 2019 under new provisions introduced by Revenue.

In addition, farmers have the option of stepping out of income averaging for the tax year 2020 due to the impact of Covid-19 on incomes.

The measures announced recently relate to allowances available to self-employed individuals and farmers.

A number of temporary income tax measures to assist farmers and other self-employed individuals who have been adversely impacted by the Covid-19 restrictions have been introduced under the new financial provisions. These measures mean that:

■ Self-employed individuals can claim to have their 2020 losses and certain unused capital allowances carried back and deducted from their profits for the year of assessment 2019, thus reducing the amount of income tax payable on those profits. A €25,000 limit on the total amount that may be carried back will apply.

■ Self-employed individuals can make interim claims based on the estimated amount of relief available to them, thereby accelerating the impact of the provisions.

■ Farmers have the option to step out of income averaging for the tax year 2020, notwithstanding that the farmer may also have stepped out of income averaging in one of the four preceding tax years.

ICMSA farm business chair Shane O’Loughlin welcomed the flexibilities, saying the measures introduced will provide “some relief to individual farmers whose income levels have been impacted by Covid-19”.

However, he warned that “more imagination” will be required in Budget 2021 to address the issue of farmincome volatility.

“Going forward, farm incomes will vary from year to year and in some cases very substantially, and the income tax code will simply have to cater for such ups and downs in a more structured and effective way,” he said.

“ICMSA has proposed a Farm Management Deposit Scheme where a farmer can save money in a tax-efficient manner in a good year, in order to get through more difficult years. Such a proposal has been referenced in the Programme for Government, but if the Government is serious about protecting the family farm, it must become a reality in Budget 2021.”