Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I think I am the only farmer in the room. I may know a little bit more. I fully recognise that farm income volatility can be a prevalent feature of the agricultural sector. In response to this, a targeted relief to assist with income volatility is available to farmers under the income averaging regime. This scheme has been in place since the introduction of farm taxation. It provides a useful mechanism for smoothing out the income volatility associated with the farming sector by allowing farmers to pay tax based on the average of the aggregate profits and losses of the farming trade over a five-year period. In effect, one fifth of the farmer’s profits and losses for the five years is charged for a year.

In acknowledgement of the prevalence of income volatility, my Department sought to introduce further additional flexibility to the income averaging regime in recent budgets to reflect this new reality and to maximise the number of farmers who can level out volatile incomes through the averaging system. In the Finance Act 2014, the availability of income averaging was extended to permit farmers in receipt of income from an on-farm diversification trade or profession to elect into the averaging regime. The period of income averaging was also extended from three to five years, thereby providing a longer timeframe over which income volatility can be smoothed. In the Finance Act 2016, an optional so-called step-out from the regime was introduced for farmers to ease financial pressures and improve cashflow for farmers in a year when they experience lower than expected incomes.

In addition, following discussions with my colleague, the Minister for Agriculture, Food and Marine, Deputy Creed, I have committed to continuing our engagement on exploring further taxation measures for income stabilisation and undertaking a review of agricultural tax incentives more generally in advance of budget 2019. This will include an examination of existing schemes, including income volatility measures, as well as engagement with relevant stakeholders. The aim of the review will be to ensure that these schemes are operating in an efficient and effective manner and meeting their policy objectives in this area.

Therefore, on the basis that there is already a targeted tax measure available to full-time farmers under the income averaging regime and considering that I have already committed to undertake a review of agricultural taxes more broadly prior to budget 2019, I do not propose to accept this amendment.