Noel Grealish (Galway West, Independent)
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80. To ask the Minister for Finance if he will consider introducing capital or other allowances for single farm payment entitlements with a base cost to allow the cost, now regarded as a loss since December 2014, to be written off against income tax; and if he will make a statement on the matter. [31246/16]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by Revenue  that a single farm payment entitlement is a chargeable asset for capital gains tax (CGT) purposes. All entitlements held by farmers under the Single Payment Scheme (SPS) expired on the 31 December 2014 when it was replaced by the Basic Payment Scheme under the EU Common Agriculture Policy (CAP). Accordingly, any gains/losses arising on the disposal of entitlements prior to the abolition of the SPS fall within the scope of CGT in the same manner as chargeable gains/allowable losses made on the disposal of any other chargeable assets.

Finance Act 2014 introduced section 604C in the Taxes Consolidation Act 1997 in order to provide an exemption from CGT for certain farmers who were required to dispose of their single payment entitlements on foot of changes being introduced at that time under CAP. The exemption is available in respect of any chargeable gains arising from the disposal by the owners of payment entitlements under the SPS where all of those entitlements were leased out in 2013 and where the owners, because of the change in CAP regulations, were advised by the Department of Agriculture, Food and the Marine, to transfer their entitlements to an "active" farmer by 15 May 2014. Losses arising on the disposal of payments entitlements in such circumstances are treated as allowable losses for CGT purposes in the normal manner.

In addition, a claim for CGT relief may arise under section 538 of the Taxes Consolidation Act 1997 in respect of losses incurred by farmers as a result of the abolition of single farm payment entitlements where the entitlements were purchased by the farmers concerned. The allowable loss is the capital loss equivalent to the amount incurred by the person when the entitlement was acquired.

Where a claim for relief for an allowable loss is made, the amount of the loss can only be set off against other chargeable gains made by the farmer in that year or in any subsequent year. Capital losses incurred as a result of the abolition of single farm payment entitlements, as with all capital losses, are not allowable against income.  I would also point out that there is no time limit within which the loss may be carried forward and set off against future chargeable gains.