This is a subscriber-only article
The benefits of tax relief for young trained farmers were recognised on budget day last week. Minister for Finance Paschal Donohoe announced that the young trained farmers stamp duty relief will continue up to 31 December 2021 and the 100% stock relief on income tax for certain young trained farmers will also run for a further three years to the end of 2021.
Farmers also stand to benefit from a Future Growth Loan Scheme. The scheme will provide long-term, unsecured investment finance for farmers and small-scale companies in the food and seafood sectors.
So, for young farmers with ambitious plans to start or expand their business but little or no financial security, there is much to welcome in Budget 2019.
In common with other taxpayers, farmers will benefit from changes to the standard income tax rate band, which is going up by €750 for all earners. This means single farmers will now hit the higher band when their earnings reach €35,300 (previously €34,550).
Married couples with one income earner will hit the higher band at €44,300 (previously €43,550). This change results in an annual tax saving of €350 for taxpayers in the marginal rate tax bracket.
The self-employed earned income credit is also going up by €200 from €1,150 to €1,350. However, it still falls short of the €1,650 PAYE employee tax credit.
Other welcome measures in the budget include the lifting of the restriction under income averaging (whereby farmers with additional self-employed income for either themselves or their spouses could not participate). However, it is disappointing that farmers can only step out of averaging once every five years.
It is hard to see why, for example, if a farmer steps out from income averaging in year one and repays the deferred amount in years two and three, he cannot be eligible to step out again in years four or five. This would help farmers to better manage volatile incomes.
Minister Donohoe missed the opportunity to introduce a measure to help farmers cope with the impact of this year’s fodder crisis.
A destocking relief, running for a period of, say, three years, could help offset the worst impact of the summer drought in what has been a difficult year for many farm businesses.
Farmers would also benefit from the introduction of a scheme allowing them to deposit funds in profitable years, which they could then draw down in tougher times.
Carbon tax
While no immediate change to carbon tax was announced in the budget, this is likely to be only a temporary respite as the minister has flagged his intention to “put in place a long-term trajectory for carbon tax increases out to 2030 in line with the recommendations from the Climate Change Advisory Council and the special Oireachtas committee which is examining climate change”.
Agricultural relief
While looking small the €10,000 increase in the group A threshold bringing it to €320,000 is welcome, the bigger item on this is that with agricultural relief one can now pass €3,200,000 of agricultural assets tax free. This is an increase of €100,000.
Some of these missed opportunities are technical adjustments and/or non-cost measures.
SHARING OPTIONS: