Brendan Griffin
Question:88. Deputy Brendan Griffin asked the Minister for Finance his views on a matter (details supplied) regarding patronage shares; and if he will make a statement on the matter. [40210/16]
View answerWednesday, 14 December 2016
Questions (88)
Written answers
I would first note, as I have previously, that since the establishment of the Revenue Commissioners in 1923, successive Governments and the Oireachtas have reaffirmed the principle of the independence of the Revenue Commissioners in their dealings with the tax affairs of any individual under tax and customs legislation. This independence is seen as critical to maintaining the integrity of the taxation system and forms a key pillar of Revenue's Governance framework.
In relation to the Capital Gains Tax exemption introduced in Finance Act 2014, referred to by the Deputy in the details supplied with this Question, this was a policy measure introduced in response to a change in the EU Common Agriculture Policy (CAP). The technical change to the CAP impacted on those farmers who leased 100% of their land and farm payment entitlements, and resulted in those farmers being obliged either to sell their farm payment entitlements or lose them under the new CAP. Affected farmers were advised by the Department of Agriculture, Food and the Marine to transfer their farm payment entitlements to active farmers in advance of the CAP changes taking effect, and in these circumstances I considered it appropriate to provide an exemption from CGT on any chargeable gains arising from such a disposal.
By contrast, Revenue's position with regard to the taxation of Kerry Co-op patronage shares is based on long-standing principles of taxation contained in current tax legislation. The issue of patronage shares held in Kerry Co-op and their tax treatment was considered at a recent Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach held on Wednesday 7 December at which representatives from Revenue were in attendance to answer questions about the matter. On the tax technical issue itself as regard the patronage shares in question and liability to income tax, I am aware that Revenue explained its view that the true market value of the shares received at par is correctly assessable as a trading receipt of the supplier's farming business and is therefore assessable to income tax. The shares essentially represent a form of payment received for the milk supplied and therefore the value of the shares forms part of the farmer's trading income for the relevant years.
Arising from this meeting Revenue undertook to allow the persons affected by this issue additional time to engage with them on this matter. In that regard, I am advised that Revenue will shortly send a letter to each farmer concerned clarifying some matters that have arisen from their original letter to farmers and also explaining how Revenue proposes to bring this matter forward from here.
I am also advised that Revenue has been asked to facilitate a test case before the Tax Appeals Commission (TAC) to determine the tax technical issue. The TAC is an entirely independent statutory body with sole responsibility for accepting or refusing appeals and deciding how it will process appeals where common or related issues arise. I am advised that Revenue will, however, facilitate such a process and will address this matter in its further letter to the farmers concerned.