Holly Cairns
Question:444. Deputy Holly Cairns asked the Minister for Finance his views on introducing a farm income volatility tool into the Irish tax code. [41756/22]
View answerTuesday, 26 July 2022
Questions (444)
Written answers
The Deputy may wish to note that a farm income volatility tool currently exists within the Irish tax code.
Section 657 of the Taxes Consolidation Act 1997 provides for income averaging, which allows farmers to pay tax based on the average of five years’ farming profits and losses. This means one-fifth of the profits for the five years is charged to tax for the year. If a farmer opts in to averaging, they must remain within the averaging scheme for a minimum of five years. If they revert to the normal basis of assessment a review will be done. However, a farmer may also elect to temporarily step-out of averaging for a single year. A special additional step-out arrangement related to the pandemic was put in place for 2020 where a farmer had already stepped out in one of the preceding four years.
Further information on this tax measure is available from the Revenue website at:
www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-23/23-01-34.pdf
In terms of changes to existing income averaging provisions or introduction of any additional farm income volatility tools, decisions on taxation matters are made in the context of the annual Budget process, and, as the Deputy will be aware, it is a long-standing practice of the Minister for Finance not to comment in advance of the Budget on any tax matters which might be the subject of Budget decisions.