Written answers

Tuesday, 17 December 2013

Department of Finance

Single Payment Scheme Administration

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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158. To ask the Minister for Finance in the event of the 2013 single farm payments and disadvantaged area payments for this year not being paid during the calendar year and subsequently being paid in 2014, if it is allowed to account for these payments as an accrual in the 2013 tax return, presuming the tax payer is making returns based on calendar year accounts; and if he will make a statement on the matter. [54209/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that the position with regard to the single payment is as follows: Income from a trade is normally calculated on an earnings basis for an accounting period to which accounts are made up. For simplicity, Revenue allows the single farm payment to be accounted for on either of the following basis:

Receipts Basis.

The single payment may be recognised as a receipt pertaining to the date the cheque is issued by the Department of Agriculture, Food and the Marine.

Example 1

Accounts are made up to September annually. The single payment for the year 2013, if paid on say 20th December 2013, will form a receipt of the year ended 30th September, 2014 (the 2014 tax year). If however it is not paid until say 10th January 2014, it will still form a receipt of the year ended 30th September 2014 (the 2014 tax year)

Example 2

Accounts are made up to December annually. The single payment for the year 2013, if paid on say 20th December 2013, will form a receipt of the year ended 31st December 2013 (the 2013 tax year). If however it is not paid until say 10th January 2014, it will form a receipt of the year ended 31st December 2014 (the 2014 tax year). There will therefore be no single payment recognised in the tax year 2013

Annual Basis.

The single payment may be recognised as a receipt accrued over the year (January to December) in respect of which it was paid.

Example 1

Accounts are made up to September annually. The single payment for the year 2013, regardless of when it is paid, will form a receipt 9/12 of which will fall into the year ended 30th September 2013 (2013 tax year) and 3/12 of which will fall into the year 30th September, 2014 (2014 tax year).

Example 2

Accounts are made up to December annually. The single payment for the year 2013, regardless of when it is paid, will form a receipt for year ended 31 December 2013 (2013 tax year)

Revenue will accept either the Receipts Basis or the Annual Basis, provided taxpayers apply the basis consistently, commencing in the year 2005 when the payments were introduced (or on commencement of farming) and there is no significant loss of revenue over that which would arise if the accounts were prepared on a full earnings basis. Where the use of the Receipts Basis would result in no single payment being recognised in a 12 month basis period (e.g. where the issue of the single payment cheque is delayed until after the year-end), the returns of that and subsequent periods may be submitted on the Annual Basis. Revenue reserves the right to carry out reviews if persons change the basis on which their accounts are prepared.

Taxpayers who submit accounts on an earnings basis are not permitted to change their system of accounting to either of the simplified systems, Receipts Basis or Annual Basis.

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