asked the Minister for Finance the reasons the Revenue Commissioners are demanding opening capital statements, balance sheets and profit and loss accounts from farmers for income tax purposes instead of the simple AG-3 form which had been accepted hitherto and if the level of accounts required of farmers for tax purposes in this country is considerably more complicated than those required in Northern Ireland.
Ceisteanna—Questions. Oral Answers. - Farming Profits Taxation.
9.
When the scheme for the taxation of farming profits was introduced in 1974, a simplified form of account—Form AG 3—was made available to farmers who chose to be assessed on the basis of accounts. As experience over the years indicated that the AG 3 form was not sufficiently comprehensive to provide an accurate assessment of tax liability, it was decided in 1978 that farmers who were assessed on the accounts basis would, in common with all other traders, be required to supply properly completed accounts, including balance sheets. The revised form A.G. 3 is supplementary to such accounts.
However, as I announced in my budget speech yesterday, I recognise that farmers between £40 and £50 RV entering the tax system for the first time may have difficulty in preparing accounts and accordingly I have decided that a simplified form of accounts should be used in these cases. The Revenue Commissioners are consulting with the farming organisations to examine the form such simplified accounts should take.
I understand that the position in Northern Ireland is that farmers are treated in exactly the same way as other traders and must produce properly completed accounts, including balance sheets. In the case of small farmers who show that the cost of preparation of proper accounts would impose hardship on them a form equivalent to the Form AG 3 originally in use here is accepted.
The Deputy is no doubt aware that in Northern Ireland all farmers, and not just those above a specified valuation threshold, are within the tax net. Here, farmers below the specified threshold are not chargeable to tax on their farming profits and are not therefore required to complete any forms—unless they or their spouses have other income.
Would the Minister be prepared to consider requesting the Revenue Commissioners to give a concession similar to that obtaining in Northern Ireland? Where farmers with a valuation in excess of £50 can show that adherence to the full requirements of the production of balance sheets would propose a disproportionate cost, would the Revenue Commissioners accept the more simple form of accounts?
I cannot give any such guarantee. Experience shows that under previous procedures the information required was not sufficiently comprehensive. Evidence indicated that in some cases the information that appeared on the accounts originally submitted showed a loss, but after further consideration of more detailed accounts they indicated that there was a considerable profit in respect of which tax was paid. In the light of that experience it is understandable that properly vouched accounts should be made available.