Joe Higgins
Ceist:207 Mr. Higgins (Dublin West) asked the Minister for Finance the amount of the £1.5 billion received by farmers in 1996 from the EU which is considered as taxable income by the Revenue Commissioners. [21843/97]
Written Answers. - Farmers' Income.
I am advised by the Revenue Commissioners that the income tax statistics available on farmers do not distinguish between their income from EU sources as opposed to other sources. In arriving at a figure for taxable income, deductions from gross income must be made, in accordance with the Income Tax Acts, in respect of expenses, capital allowances, stock relief, interest repayments on borrowings, contributions towards medical assurance, retirement annuities and basic personal allowances, or exemption limits, as appropriate.
In addition, the extent to which farmers are taxable in respect of EU payments depends on the nature of the payments. Where a payment is a subsidy towards income it will generally be taxable as income. However, certain payments, while in the nature of income, are specifically exempted from tax by virtue of the Income Tax Acts, e.g. forestry premia are exempt from income tax under section 18 of the Finance Act, 1969.
Where a payment is made to a farmer in circumstances where it is intended to be an amount to aid the purchase of a capital item it will not be taxable as such but will, generally speaking, reduce the cost of the item for future capital gains tax purposes and for capital allowances purposes, if appropriate. Payments made for the forfeiture or surrender of rights will generally be liable to capital gains tax.