Dáil Éireann Debate, Tuesday - 10 October 2023
134. Deputy Carol Nolan asked the Minister for Finance if he will support a permanent retention of two step-out years per five-year cycle in cases in which a farmer is allowed to step-out of income averaging more than once in a five-year period (details supplied); and if he will make a statement on the matter. [44031/23]
View answerSection 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. 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.
The Financial Provisions (Covid-19) (No. 2) Act 2020 contained once-off income tax reliefs for self-employed individuals carrying on a trade or profession who were profitable in 2019 but, as a result of the Covid-19 pandemic, incurred losses in 2020. This provided an option to farmers who incurred a loss in 2020 to step out of income averaging for the tax year 2020, notwithstanding that the farmer may already have stepped out of income averaging in one of the four preceding tax years.
In terms of changes to current income averaging provisions, decisions on taxation matters are normally made in the context of the annual Budget process. As the Deputy will be appreciate, it is a longstanding 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.
