A three-pronged strategy to help farmers in a difficult year was announced in Budget 2017 by Minister for Agriculture Michael Creed. Farmers will also benefit from a number of general measures announced by Minister for Finance Michael Noonan and other Government ministers.
Creed’s three headings are a €120m increase in spending on Department of Agriculture schemes, a new €150m low-interest loan fund for farmers and a package of taxation changes.
Key farm schemes to benefit from additional money will be the new welfare scheme for sheep and GLAS III. The Minister for Agriculture described the new loan scheme as ground-breaking. It will give farmers access to funding at historically low rate of 2.95%. It is a once-off but, he said, will be a template that could be used again to help farmers.
Opt-out
The taxation changes include the expected opt-out measure for farmers who use income averaging to help them cope with a difficult year.
Minister of State Andrew Doyle announced measures for forestry, horticulture and organics. Elsewhere, there is no increase on green farm diesel or other motor fuels. There are modest cuts to the rates of USC. The thresholds for exemption from Capital Gains Tax on inheritance and gifts rise. Payment rates of Farm Assist and the old-age pension increase from next March.
Minister Creed placed his budget measures against the challenge of low farm prices and looming Brexit. “To properly address the on-going pressures on farm incomes a strategic approach is required, which seeks to provide solutions not just for today – but that will have a sustained impact over the longer term,” he said.
To deal with Brexit, an extra €2m is allocated for Bord Bia in 2017. Teagasc will receive an additional €1.3m.
GLAS
Minister for Agriculture Michael Creed said GLAS III would open in mid-November “or perhaps earlier” and remain open for about six weeks for applications. Spending on the scheme in 2017 will increase by €69m to €211m. At the average payment seen in GLAS I and II, this would allow in about 12,000 more farmers, Creed said. The news will be welcomed by farmers now finishing in earlier AEOS schemes who will have the opportunity to apply to a GLAS scheme, with contracts possibly starting on 1 January and first payments in autumn 2017. Other applicants will be farmers who applied to GLAS before but were squeezed out by higher priority farmers.
New sheep scheme
€25m funding is allocated for the new sheep welfare scheme to open in 2017. Payment rate is expected to be €10/ewe. We already know that flock owners will participate by selecting from a list a number of welfare measures that best suit their flocks and farms.
Listen to "IFA's Gerry Gunning on the merits of Budget 2017" on Spreaker.
BDGP
The scheme will reopen for new applicants and €52m has been allocated for 2017.
€26m
funding allocated for Knowledge Transfer in 2017.
TAMS
Funding of €50m is allocated for 2017. This will allow the scheme to be opened for tillage farmers.
Forestry
Minister of State Andrew Doyle announced that €111.6m will be made available for forestry development during 2017. The figure includes a capital carryover. “The funding being provided will allow for over 7,100ha of new forests to be planted, almost 800ha more than the total area planted in 2015,” he said. “Funding will be provided for 110km of new forest roads and for forest management initiatives.”
Horticulture
Funding for capital investments in horticulture is increased to €5m for 2017, Doyle said. The sector will have access to the new €150m low-interest loan fund. Bord Bia is investing in a market development programme.
Organics
Funding of €10m for 2017. This allocation will support more than 1,600 organic farmers, many of them converting for the first time, Minister Doyle said.
Farm Assist
The means test will revert to the position which applied prior to Budget 2012. This means 70% of income will be assessed rather than 100%. Child disregard is reinstated. These changes will allow a larger number of applicants qualify for payment. The payment rate will increase by €5/week from March 2017.
Income averaging
The budget introduced an opt-out clause in income averaging. Averaging was introduced many years ago to even out volatility in incomes due to weather and price changes. Taxable income in any one year is taken as the average of the past five years and the average rolls forward each year.
The Government recognises that further relief is needed for the extreme volatility farmers are experiencing in 2016. So, starting immediately, farmers using averaging will be able to pay tax on the basis of the actual income in a difficult year – rather than on the average of the previous five years. Tax liability in that year will thus more closely reflect actual income. Deferred tax liability is then paid over the following four years. Opt out can be used once in any five year period. Minister Creed said he had also considered an income stabilisation measure but that it was not being introduced in 2017.
Earned income tax credit
This increases by €400 to €950. This relief is being gradually increased to match the PAYE allowance.
Capital acquisitions tax
The thresholds for exemption from CAT have been increased. This increases the value of agricultural relief on transfer of farms by inheritance or gift. The threshold for transfers from a parent to a child increases from €280,000 to €310,000. The Group B threshold (transfer to a brother, sister, niece, nephew or grandchild) increases from €30,150 to €32,500.The Group C general threshold increases from €15,075 to €16,250. The minister said he will revisit the thresholds in coming budgets. Meanwhile, agricultural relief is retained at 90%.
Farmers will benefit from changes announced to the three lower rates of universal social charge. The lowest rate of 1% is to be reduced to 0.5%; this applies to the first €12,012 of income. The 3% rate is to be reduced to 2.5%; this applies on income from €12,013 to €18,772. The 5.5% rate is to fall to 5%; this applies to income between €18,773 up to €70,044.Some existing PRSI benefits are extended to the self-employed and farmers, including invalidity pension.The SEIs accelerated capital allowance scheme for energy-efficient equipment is extended to farmers. Minister Creed said the scheme will be of benefit to high-energy consuming sectors such as dairy, pig and poultry production. Capital gains tax restructuring relief is extended for a further three years to 31 December 2019. The relief encourages farmers to consolidate split farms by sale and purchase of land. The farmer’s flat-rate addition is being increased from 5.2% to 5.4% with effect from 1 January 2017. Payments under the Raised Bog Restoration Incentive scheme will be exempt from capital gains tax.Carbon tax relief is provided for solid fuels that include a biomass element and for fuel inputs to combined heat and power plants (CHP).There is an increase of 500 in the number of places for the Rural Social Scheme, bringing the total number to 3,100. Read more
Full coverage: Budget 2017
A three-pronged strategy to help farmers in a difficult year was announced in Budget 2017 by Minister for Agriculture Michael Creed. Farmers will also benefit from a number of general measures announced by Minister for Finance Michael Noonan and other Government ministers.
Creed’s three headings are a €120m increase in spending on Department of Agriculture schemes, a new €150m low-interest loan fund for farmers and a package of taxation changes.
Key farm schemes to benefit from additional money will be the new welfare scheme for sheep and GLAS III. The Minister for Agriculture described the new loan scheme as ground-breaking. It will give farmers access to funding at historically low rate of 2.95%. It is a once-off but, he said, will be a template that could be used again to help farmers.
Opt-out
The taxation changes include the expected opt-out measure for farmers who use income averaging to help them cope with a difficult year.
Minister of State Andrew Doyle announced measures for forestry, horticulture and organics. Elsewhere, there is no increase on green farm diesel or other motor fuels. There are modest cuts to the rates of USC. The thresholds for exemption from Capital Gains Tax on inheritance and gifts rise. Payment rates of Farm Assist and the old-age pension increase from next March.
Minister Creed placed his budget measures against the challenge of low farm prices and looming Brexit. “To properly address the on-going pressures on farm incomes a strategic approach is required, which seeks to provide solutions not just for today – but that will have a sustained impact over the longer term,” he said.
To deal with Brexit, an extra €2m is allocated for Bord Bia in 2017. Teagasc will receive an additional €1.3m.
GLAS
Minister for Agriculture Michael Creed said GLAS III would open in mid-November “or perhaps earlier” and remain open for about six weeks for applications. Spending on the scheme in 2017 will increase by €69m to €211m. At the average payment seen in GLAS I and II, this would allow in about 12,000 more farmers, Creed said. The news will be welcomed by farmers now finishing in earlier AEOS schemes who will have the opportunity to apply to a GLAS scheme, with contracts possibly starting on 1 January and first payments in autumn 2017. Other applicants will be farmers who applied to GLAS before but were squeezed out by higher priority farmers.
New sheep scheme
€25m funding is allocated for the new sheep welfare scheme to open in 2017. Payment rate is expected to be €10/ewe. We already know that flock owners will participate by selecting from a list a number of welfare measures that best suit their flocks and farms.
Listen to "IFA's Gerry Gunning on the merits of Budget 2017" on Spreaker.
BDGP
The scheme will reopen for new applicants and €52m has been allocated for 2017.
€26m
funding allocated for Knowledge Transfer in 2017.
TAMS
Funding of €50m is allocated for 2017. This will allow the scheme to be opened for tillage farmers.
Forestry
Minister of State Andrew Doyle announced that €111.6m will be made available for forestry development during 2017. The figure includes a capital carryover. “The funding being provided will allow for over 7,100ha of new forests to be planted, almost 800ha more than the total area planted in 2015,” he said. “Funding will be provided for 110km of new forest roads and for forest management initiatives.”
Horticulture
Funding for capital investments in horticulture is increased to €5m for 2017, Doyle said. The sector will have access to the new €150m low-interest loan fund. Bord Bia is investing in a market development programme.
Organics
Funding of €10m for 2017. This allocation will support more than 1,600 organic farmers, many of them converting for the first time, Minister Doyle said.
Farm Assist
The means test will revert to the position which applied prior to Budget 2012. This means 70% of income will be assessed rather than 100%. Child disregard is reinstated. These changes will allow a larger number of applicants qualify for payment. The payment rate will increase by €5/week from March 2017.
Income averaging
The budget introduced an opt-out clause in income averaging. Averaging was introduced many years ago to even out volatility in incomes due to weather and price changes. Taxable income in any one year is taken as the average of the past five years and the average rolls forward each year.
The Government recognises that further relief is needed for the extreme volatility farmers are experiencing in 2016. So, starting immediately, farmers using averaging will be able to pay tax on the basis of the actual income in a difficult year – rather than on the average of the previous five years. Tax liability in that year will thus more closely reflect actual income. Deferred tax liability is then paid over the following four years. Opt out can be used once in any five year period. Minister Creed said he had also considered an income stabilisation measure but that it was not being introduced in 2017.
Earned income tax credit
This increases by €400 to €950. This relief is being gradually increased to match the PAYE allowance.
Capital acquisitions tax
The thresholds for exemption from CAT have been increased. This increases the value of agricultural relief on transfer of farms by inheritance or gift. The threshold for transfers from a parent to a child increases from €280,000 to €310,000. The Group B threshold (transfer to a brother, sister, niece, nephew or grandchild) increases from €30,150 to €32,500.The Group C general threshold increases from €15,075 to €16,250. The minister said he will revisit the thresholds in coming budgets. Meanwhile, agricultural relief is retained at 90%.
Farmers will benefit from changes announced to the three lower rates of universal social charge. The lowest rate of 1% is to be reduced to 0.5%; this applies to the first €12,012 of income. The 3% rate is to be reduced to 2.5%; this applies on income from €12,013 to €18,772. The 5.5% rate is to fall to 5%; this applies to income between €18,773 up to €70,044.Some existing PRSI benefits are extended to the self-employed and farmers, including invalidity pension.The SEIs accelerated capital allowance scheme for energy-efficient equipment is extended to farmers. Minister Creed said the scheme will be of benefit to high-energy consuming sectors such as dairy, pig and poultry production. Capital gains tax restructuring relief is extended for a further three years to 31 December 2019. The relief encourages farmers to consolidate split farms by sale and purchase of land. The farmer’s flat-rate addition is being increased from 5.2% to 5.4% with effect from 1 January 2017. Payments under the Raised Bog Restoration Incentive scheme will be exempt from capital gains tax.Carbon tax relief is provided for solid fuels that include a biomass element and for fuel inputs to combined heat and power plants (CHP).There is an increase of 500 in the number of places for the Rural Social Scheme, bringing the total number to 3,100. Read more
Full coverage: Budget 2017
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