Tax Code

Dáil Éireann Debate, Wednesday - 7 February 2024

Wednesday, 7 February 2024

Questions (99, 100)

Claire Kerrane

Question:

99. Deputy Claire Kerrane asked the Minister for Finance if ACRES payments, both under the general and co-operation projects, are subject to income tax and USC; his views on same; if he will comment on scenarios where an individual receiving two ACRES payments in 2024 will be subject to a greater level of taxation than would otherwise have been the case had ACRES payments been paid in 2023 and 2024, as previously announced, and, as a consequence, will receive a lower level of after-tax support under ACRES; if he is considering action to address this; and if he will make a statement on the matter. [5023/24]

Pearse Doherty

Question:

100. Deputy Pearse Doherty asked the Minister for Finance if ACRES payments, both under the general and co-operation projects, are subject to income tax and USC, his views on same, if he will comment on scenarios where an individual receiving two ACRES payments in 2024 will be subject to a greater level of taxation than would otherwise have been the case had ACRES payments been paid in 2023 and 2024 as previously announced, and, as a consequence, will receive a lower level of after-tax support under ACRES, if he is considering action to address this; and if he will make a statement on the matter. [5025/24]

Written answers

Minister for Finance

I propose to take Questions Nos. 99 and 100 together.

The Agri-Climate Rural Environment Scheme (ACRES) is an income support paid to farmers.  ACRES payments will be subject to tax as income and will generally be taxed under Schedule D Case I as a receipt of a trade of farming.  In the case of individual farmers, an ACRES payment will be subject to income tax and USC.

In general, payments in the form of income supports to farmers are paid in respect of a full calendar year and taxed in that year.  However, in cases where the payment for the relevant year has not issued until the following year, the assessable income for tax purposes will be dependent on the basis of accounting adopted by the farmer.

The earnings basis is the strictly legal basis for drawing up accounts for tax purposes, however,  I have been advised that Revenue will accept either the earnings basis or the receipts basis provided taxpayers apply the basis consistently and there is no significant loss of revenue over that which would arise if the accounts were prepared on a full earnings basis.

Using the earnings basis, the ACRES payment may be recognised as a receipt accrued over the calendar year in respect of which it was paid.  For example, in a case where a farmer’s accounts are made up to 31 December annually, the ACRES payment for the year 2023, regardless of when it is paid, will form a receipt of the year ended 31 December 2023 (2023 tax year).

Under the receipts basis, the ACRES payment may be recognised as a receipt pertaining to the date the payment is issued by the Department of Agriculture, Food and the Marine (DAFM).  For example, if accounts are made up to 31 December annually, the ACRES payment for the year 2023, if paid in February 2024, will form a receipt of the year ended 31 December 2024 (2024 tax year).

Where the use of the receipts basis would result in no ACRES payment being recognised in a 12-month basis period (e.g. where the issue of the ACRES payment is delayed until after the year-end), the returns of that and subsequent periods may be submitted on the earnings basis.

It should be noted that Revenue reserves the right to carry out reviews if persons change the basis on which their accounts are prepared.

Question No. 100 answered with Question No. 99.