Vol. 399 No. 3
16 Mr. Connor asked the Minister for Social Welfare the reason his Department continue to maintain a code which disallows an applicant for unemployment assistance to claim depreciation of fixed or capital assets as an expense necessarily incurred in running a farm in the determination of the rate of means attributed to any such applicant.
Means from farming for unemployment assistance purposes is assessed under section 146 (1) (c) of the Social Welfare (Consolidation) Act, 1981, as amended by section 13 of the Social Welfare (No. 2) Act, 1985. The calculation is done on an income and expenditure basis and represents the income from the farm less any expenses actually and necessarily incurred in earning that income. In determining the net income of the farm, allowances are made for such current expenses as the rent of land, stock replacements, fertilisers, crop sprays, seeds, veterinary expenses, the cost of feeding stuffs, the cost of electricity and petrol used for farm purposes.
The principles applied for social welfare purposes when making allowances for the use or capital equipment by smallholders are separate and distinct from those applied in business generally.
In the case of capital assets, such as farm machnery and equipment, the capital cost is not allowed as an expense. Instead, an allowance is made for the depreciation of these assets which, of their nature have a fairly definite life span and the use of which is very directly related to farm output. Depreciation on such assets is, accordingly, estimated as a proportion of the gross output of the farm.
Where farm machinery or equipment is purchased outright, an allowance for depreciation relative to their usage is made. Where the purchase is by way of a hire purchase or leasing arrangement the full amount of the repayments due under such agreement is allowed in the means assessment; alternatively, a reasonable allowance for depreciation is made.
Depreciation is not allowed in respect of other capital assets such as farm buildings, yards and land reclamation. Allowances for the erosion of capital assets such as these are not considered appropriate to the unemployment assistance scheme which essentially is a cash income support scheme. However, the normal cost of repairs, upkeep, and maintenance is allowed. If for some reason these cannot be readily determined, percentage allowances are made related to gross output and the income generated.
When depreciation or overhead costs are allowed on a percentage basis, the figures used are based on the latest available data in the annual national farm survey published by Teagasc.
