asked the Minister for Finance the conditions under which a small farmer becomes liable for income tax.
Ceisteanna—Questions. Oral Answers. - Income Tax Liability.
14.
Section 18 of the Finance Act, 1969, provides, inter alia, that the profits or gains arising from farming are not taken into account for income tax purposes. Farming means farming farm land in the State wholly or mainly occupied for the purposes of husbandry. Income from other sources is of course chargeable to tax in the ordinary way.
The occupation of farm land by a dealer in cattle, which includes sheep and pigs, or by a dealer in or a seller of milk, where the land is insufficient for the keep of the cattle brought on to the land, is regarded as the carrying on of a trade and the profits are chargeable to tax. Similarly the use of farm land for market gardening is regarded as a trade and the profits are chargeable.
Is the Minister aware of the present injustice where you can have a 1,000-acre farmer selling perhaps 500 acres of grain and he is not liable for income tax and you can have an 8-acre farmer who sells cabbage and potatoes and has 1/30th of an acre of glass and he is liable for income tax and assessed in retrospect for £2,000? Does the Minister not agree that this kills industry and effort on the part of the smallholder to make himself viable?
I do not think that available evidence suggests that this liability for tax kills industry. On the other hand I suggest that what the Deputy has described is, if anything, an argument in favour of the application of income tax to all farmers. I do not know if that is what the Deputy intends but that is what it sounds like to me.
This is what the Ministe would like to imply. This is party political foolishness.
(Interruptions.)
This question was raised last year by Deputy Foley. Is the Minister aware that an eight-acre farmer who by his own hard work and industry, growing cabbage and potatoes and selling on the Dublin market, was assessed in retrospect for £2,000 simply because it was discovered that he was able to pay £5,500 for an additional 32 acres to make himself viable? Surely the Minister sees the need for legislation to ensure that this type of industry is not killed? Do Father McDyer's farmers all come into this?
We cannot have a debate on this point.
It is a question of whether the work carried on comes legally within the definition of farming or within the definition of a trade or business. The case to which the Deputy refers came within the definition of a trade or business and was liable to tax like any other trade or business.
Because of the seriousness of the situation does the Minister not see a great need for amending the law?
If the Deputy is referring to a specific case——
I am referring to all similar cases.
It is not true that in all similar cases the people are prevented from becoming viable by reason of income tax. The same thing could be said about any small business.
Because they sell vegetables?
Question No. 15.
Is it not correct that irrespective of whether it is a small or big farmer if he sells produce from the farm it is not taxable? If I grow potatoes or vegetables of any kind and sell them surely I am not liable to tax when I produce them myself?
You could sell 500 acres of potatoes and not be taxable. This is the anomaly and injustice of it.
The decision depends on the legal definition of whether you are farming or whether you are engaged in a trade or business. I have given the details of what is regarded as farming and what is not.
I am calling Question No. 15.
Would the Minister not consider amending the definition?