Again, this is designed to apply to corporation tax provisions similar to those which are already applicable to income tax under section 27 of the Finance Act, 1974. It provides that relief in respect of farming or market gardening losses by way of offset against other profits will not be granted where the farming or market gardening is not carried on on a commercial basis and with a view to realisation of profits. In other words, the exemption will be available for genuine farmers but it will not be there for people investing in farming for purposes other than the pursuit of farming.
SECTION 17.
Question proposed: " That section 17 stand part of the Bill."
How can the definition be legally applied to those who are in the pursuit of farming and those who just——
All we are doing here is adapting the existing provisions and applying them to corporation tax. The relief will be available for companies other than those who are not engaged in farming on a commercial basis. In other words, the reliefs are not available for " hobby farmers ".
In farming, three years is a very short period. He will come in and run the business at a loss for two or three years and then start making money and he goes into this as a business.
A perfectly legitimate loss situation could occur over a period of three years in farming operations. The Revenue Commissioners looked to see if business was carried on in such a way as to generate profit.
How will they do that? I remember a farmer in the North of Ireland who had piggeries and who let the pigs run wild. A farmer may have a new idea that the Revenue Commissioners never heard of.
That is a question for the Minister for Agriculture and Fisheries.
Have you any further remarks to make on the section? I appreciate that a hobby farmer might be using farming losses to avoid paying taxes on other sources of income. I take it that this is directed at that type of person? Has the Minister anything to say that might be of some help? This is the sort of thing that Deputies in rural constituencies are always getting queries about. Accountants are not so au fait with the agricultural sector as they are with the industrial sector.
The indications are not to that effect. I cannot add any more other than to give details of the existing provisions which are reflected in the section itself.
The section also provides for the change of personnel in the companies.
Question put and agreed to.
SECTION 18.
Question proposed: " That section 18 stand part of the Bill."
This section brings in for corporation tax purposes provisions that correspond to those relating to terminal loss relief already available under the existing law in relation to income tax under sections 311 to 315 of the 1967 Income Tax Act. A loss incurred in the last 12 months of a discontinued trade, in so far as it cannot be otherwise relieved, may be carried back and set against trading income from the same trade in the preceding three years.
I think the Minister has told us all.
Question put and agreed to.