Dáil Éireann debate -
Friday, 20 Feb 1925

Vol. 10 No. 6

ADJOURNMENT DEBATE— - INCOME TAX AND FARM ACCOUNTS.

Mr. CONNOR HOGAN

I gave notice that I would raise on the adjournment the question of Income Tax Form 79 D, which has reference to the presentation of farm accounts for the purpose of income tax under Schedule B. I do so in order to make a preliminary protest against this complex form and to focus, as it were, public attention on the very severe scrutiny. I might say rigid inquisition, into their affairs, which this form demands from farmers. Income tax on land is assessed under two schedules, A and B. The Form under A is really ownership and under B it is occupation. The principle prevailing has been under Schedule B, that you are assessed on occupation, on either the rateable value of the place or as an alternative, land purchase annuity or rent. Farmers in these hard times have protested against that assessment under Schedules A and B, and as an alternative it has been put up to them to present accounts. Superficially, that is very fair, but I submit that the form that has been supplied is a direct deterrent to the farmer to present a farm account. It is the intention of the Ministry to assess him under Schedule A or B: that is based on the valuation or purchase annuity, whichever may be the lower. The first page of this form is devoted to advice. It is superficially disinterested advice. Here is where the farmer's trouble begins. The farmer is not an accountant; probably he does not keep his books very well. On page 2 he is to give a statement showing the townland, the area in statute acres, as in the Poor Rate. Even that alone requires that the farmer must go to the county council offices to get a certificate of his area for the purpose of valuation. The third column in this is the valuation on lands. In the fourth column he has to give particulars of buildings. There are three columns, 5, 6, and 7, devoted to particulars of the tenure of each item. The nature of payment, the gross annual amount, and to whom payable. Then comes the eighth column: "what portion of the item is occupied for purpose of husbandry." This is quite a formidable compilation. But he has to give on page 3 a statement showing at least approximately how the lands which are set out on page 2 were being used on the 1st June in the year to which the account relates. He is required to give the area under plantations, gardens, lawns, avenues, walks, and amenity lands, the area let on eleven-months' or similar system or in conacre. He has to give the area of agricultural land worked by the farmer under pasture, meadow, oats, barley, wheat, potatoes, turnips, and mangels, flax, other tillage, and waste and bog. Then he is asked to reconcile the difference, if any, between the total area on this page and the total area on page 2 accounted for.

On page 4 he has to give a statement of quantity. There is a live-stock statement (number of animals). There is a harvested crops statement (quantities). There is a milk statement (quantities), and an egg statement in quantities. Under live-stock he has to give the total for horses, cattle, sheep, pigs, poultry, mules, and jennets, and other live-stock. He has to give under each of these sub-heads the number on hand at the beginning of the year, bought during the year, and born during the year, and under poultry the number hatched.

I realise that there is a good deal of public money spent in the compilation and issuing of this document. Then he has to give, as it were, the issues out of livestock—the number sold during the year, the number killed for home use during the year, the number which died during the year, the number given as gifts during the year, and the number on hand at the end of the year. Under the statement of "Harvested Crops" he has a similar procedure. He has to give the estimated quantity he has on hand at the beginning of the year of hay, straw, potatoes, other roots, oats, barley, wheat, rye and flax and tow, and he has to give the quantity harvested in the year and the amount bought outside during the year. In addition to that he has to give the estimated quantity sold in the year, fed to livestock or used as litter in the year, used as seed in the year, used in the house in the year, destroyed, or lost in the year, and on hand at the end of the year. The Milk Statement, which borders on the ridiculous, comes next. He has to state the number of cows in milk at the 1st June and also at the 1st December, the estimated quantity of gallons of milk produced in the year, the estimated quantity of whole milk sold as whole milk in the year, the amount sold but skim retained or returned, the amount used for butter-making on the farm, the amount used for cheese-making on the farm, the amount used in the household and the amount fed to stock. Next there is a statement about eggs. The farmer has to set out the estimated quantity of eggs per dozen produced in the year, the amount sold in the year, the amount used in the household in the year and the amount used for hatching in the year.

Mr. DARRELL FIGGIS

What about elections?

Mr. CONNOR HOGAN

Possibly these would be hatched. Next comes the Trading Account, with its four subheadings. The farmer has to give the value of the stock on hand at the beginning of the year, the amount bought in the year (net cost of purchase made), the amount sold in the year (gross amount of sales made), and the value of the stock in hand at the end of the year. These particulars he has to give in respect of horses, ponies, cattle, including cows, sheep, pigs, poultry, and other livestock. He has to give particulars regarding hay, straw, potatoes, other roots, oats, barley, wheat, rye, unthreshed corn, flax and tow, other harvested crops, milk, butter, cheese, eggs, wool hides, other produce, feeding cake, maize, and other live stock food not produced on farm, seeds not produced on farm, manures not produced on farm, lime and soot, implements and machinery, loose tools, harness, etc., and other items. Page 6 has a Profit and Loss Account, and on the debtor side the farmer has to bring forward his gross loss, which is the usual case. He has to give the amount of bad debts written off, the rent of agricultural land, the interest portion of land purchase annuity, interest in lieu of rent to Land Commission, payment in lieu of same, rates on agricultural land, cowsheds and barns, so much of the salary or wages of a steward or other supervising employee as in respect of his farm work, agricultural wages paid in cash, keep of farm labour boarded in, Employers' Liability and National Health Insurance, insurance of stock, crops, cowsheds, barns, etc., service fees paid for stallions, bulls, etc., hire of grazing, hire of threshing or other machinery, shoeing and veterinary expenses, repairs to farming implements and tools, valuers' and accountants' fees, and other farming expenses.

These are some of the particulars he has got to furnish. There are, in addition, nineteen queries on page 7 which he has to answer. He is asked to give complete records kept during the year of the whole of the buying and selling transactions of the farm and of the other receipts and working expenses. He is asked in what cases were the values of the different types of livestock taken at the beginning and at the end of the year. He is asked whether a valuation of stock on hand of harvested crops was made at the beginning and end of the year. Amongst other queries, he is also asked whether any expenditure has been charged in the accounts, either in wages or elsewhere, in respect of improvements of any kind, such as reclamations, drainages, new fences, tree planting, additions or improvements to building or equipment or other capital expenditure. As a rule, farmers do not charge ordinary repairs to capital expenditure. As a matter of fact, the farmer does not recognise the principle in accountancy of capital expenditure, and it never figures in his balance sheet. It is not fair that this should appear there, as it is money sunk in the land which is bound to be reproduced later. Query No. 14 asks whether all transactions in connection with the breeding and sale of horses are fully included in these accounts. Query 15 asks whether the taxpayer for the year in question engaged in any dealing in cattle, horses, milk or farm produce, apart from the buying and selling shown in these accounts. Query 16 asks whether any fancy stock were kept on the lands during the year, and 17 asks were the farming operations only of the kind usual in husbandry in the district. No. 18 asks how many farm hands were kept in constant employment during the year, and No. 19, which is the last of all these queries, asks how many persons on an average resided on the farm or consumed milk, eggs, potatoes or other items of its produce during the year. Then the farmer is asked to state the number of persons in his family and the number of guests, the number of farm hands boarded in, and the number of other employees, including domestics, grooms, gamekeepers, chauffeurs, etc. The question I want to put to the Minister is whether the returns accruing from income tax under A and B either on ownership or occupation of land are worth all this trouble to the Ministry. In order to answer all these questions, every farmer must engage expert assistance and pay for it. The filling up of returns must, moreover, impose a great strain on the Executive, as many clerks must be employed in dealing with them. I submit that the form of these accounts is so troublesome and costly, the farmer, in very despair, will reject them, and would prefer to be assessed under Schedule B. I submit that a man is deprived by this document of his legal right to have his farm account based really on his net revenue.

Mr. BLYTHE

This document is only issued in the case of farmers who do not trouble to keep proper accounts. It enables them to build up their returns, even when they have not got proper accounts, or some proper system of accountancy. Farmers who keep proper accounts have not to fill up this form. They have to give certain information asked for in the form. but their own accounts, if properly kept, are accepted. The necessity for filling up this form, apart from the question of the exemption of those who keep proper accounts——

Mr. CONNOR HOGAN

Why should a farmer who keeps a proper account have to fill this?

Mr. BLYTHE

If he cannot give evidence that he does not make a profit he must expect to be charged on valuation.

Mr. CONNOR HOGAN

If the farmer does not keep accounts in detail, which this document seems to require—

Mr. BLYTHE

I do not think that the Deputy has studied the document very carefully.

Mr. CONNOR HOGAN

I have.

Mr. BLYTHE

Then I suggest that he study it more closely. A small number of farmers will have to fill up this form. A farmer, even if he is single, must have a valuation of £150 before being liable for taxation.

Mr. CONNOR HOGAN

Supposing he has a land purchase annuity?

Mr. BLYTHE

Perhaps the Deputy would sit down and start again later. The form is a modification of the form which was used here during the British administration, but it was adapted to the circumstances of our Customs. Great care has been taken in the compilation of the form to make it one which it would be as easy as possible to fill up. A great number of questions are asked but they are asked because it was found, if a less number were asked, that endless correspondence would ensue in order to elicit all the facts.

This form endeavours to elicit all the necessary facts together and the object is to facilitate the farmer in dealing with this matter. Great attention was given to it. If Deputy Hogan, the Farmers' Union, or anybody, likes to sit down and think the form over and make any definite suggestions which will improve it in any way, we will be most happy to have those suggestions. We do not desire a form that is more complex than necessary. We want to be able to get the work done as expeditiously as possible. There is no use in condemning the Revenue authorities for asking for particulars. Their duty is to get the particulars and to see that the people who should pay income tax do not avoid paying it. They have no interest beyond getting money that is due. They are bound to get income tax when it is due. If a man claims that he did not make any profits and should not be charged, it is up to him to furnish particulars and so enable the Revenue authorities to judge whether his contention is or is not correct. If a man is not prepared to keep some records and to show some table in regard to his business, he cannot expect, to be left undisturbed; if he owes tax he has to pay it. There is no good in suggesting that questions should not be asked, and that the Revenue authorities should depend altogether on the honesty and the innate generosity of the farming community.

The Dáil adjourned at 2.55 p.m. until Wednesday, 4th March, at 3 p.m.