Mary Upton (Dublin South Central, Labour)
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Question 116: To ask the Minister for Finance if he has considered the taxation implications of receipt of decoupled payments by farmers, which might occur within one financial year; and if he will make a statement on the matter. [29347/04]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am aware of the taxation implications for farmers arising from the decision to fully decouple certain direct payment schemes from production levels with effect from 2005. In effect all FEOGA premia payments will from 2005 be replaced by a single payment to all eligible farmers. The Department of Agriculture and Food is committed to making the first annual payment under the new arrangement to farmers in December 2005. This payment will be in respect of entitlements established for the calendar year 2005. However, under the current regime FEOGA premia payments are generally made in two instalments, with an advance paid in the year to which the payment relates and the balance in the following year. The timing of the changeover from the current system to the single farm payment scheme will result in certain farmers having additional taxable income in the form of additional direct payments in the calendar year 2005. While farmers who have opted for the income averaging system can spread this additional income for taxation purposes over three years this facility is not available to part-time farmers or farmers where the spouse has off farm income. The Deputy will appreciate that in line with normal practice in the run up to the annual budget and Finance Bill I do not wish to comment further on the intention or otherwise to make changes in taxation.