Michael Creed (Cork North West, Fine Gael)
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The Minister for Finance has primary responsibility for tax policy, while the tax system is administered by the Revenue Commissioners. I am informed by them that an entitlement under the Single Payment Scheme (SPS) is a chargeable asset for capital gains tax (CGT) purposes. All entitlements held by farmers under the SPS expired on the 31 December 2014, when it was replaced by the Basic Payment Scheme (BPS). Accordingly, any gains or 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 or allowable losses made on the disposal of any other chargeable assets.

I am also informed that 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 SPS 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. As with all capital losses, those incurred as a result of the abolition of SPS entitlements are not allowable against income. Furthermore, there is no time limit within which the loss may be carried forward and set off against future chargeable gains.

Apart from the taxation question, it should also be noted that farmers who were eligible to receive a direct payment greater than €100 in 2013 (e.g. under the SPS Scheme) and who submitted a valid Basic Payment Scheme application in 2015, were eligible to receive an automatic allocation of entitlements under the 2015 Basic Payment Scheme.