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The ICMSA is calling for a new income volatility management tool in its pre-budget 2017 submission modelled on the Australian Farm Management Deposits Scheme (FMDS).
This scheme would allow a farmer to claim a tax deduction for farm management deposits in the income tax year in which they are made. The appropriate amount of the deduction is included in the tax assessable income in the income year the deposit is repaid to the farmer. The deposits scheme complements other risk management strategies available to farmers such as income averaging.
The ICMSA believes this model "has many merits" and should be used as "a template for the introduction of a farm income volatility management tool into the Irish income tax code for farmers".
Income averaging
The ICMSA has also proposed that income averaging be retained and coupled with the introduction of a supplementary measure whereby individual farmers could opt for three or five-year averaging to allow them more effectively manage income volatility for their farming enterprise.
Personal taxation
With regard to personal taxation, the ICMSA would like to see an equalising of the earned income credit of €550 introduced in Budget 2016. If granted this would see the credit increased to €1,650 effective from 1 January 2017.
The ICMSA has also called for the Universal Social Charge to be eliminated or further reduced in Budget 2017. Cuts were made to the USC in Budget 2016, with the 1.5% rate cut to 1%, the 3.5% rate cut to 3%, and the 7% rate cut by 1.5% down to 5.5%. The ICMSA has asked that the effective USC rate applicable to the self-employed be equalised to the PAYE income effective rate of 8% in this year's budget.
Land policy and taxation
The ICMSA is calling for consanguinity relief, which is due to expire on 31 December 2017, to be extended in Budget 2017. This relief applies to certain transfers of property between related persons.
On Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) the ICMSA has asked for a significant reduction in the 33% rate for both taxes. In addition, it says "the anomaly with regard to the application of Young Trained Farmer Stamp Duty Relief on transfer of a farm to a farm company where the farm is personally owned must be addressed in Budget 2017".
Under stock relief the ICMSA is calling for the introduction of a new measure whereby farmers would be allowed 100% stock relief on additional expenditure of up to €100,000.
Finally, the ICMSA, is proposing that Budget 2017 allow for flexibility in the claiming of capital allowances and that farmers be allowed to write- off capital expenditure on farm buildings and plant and machinery over a period of three and eight years with a "floating allowance" of up to 50% allowable in any one year in order to facilitate maximum utilisation.
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