Farming Income Introduction Farming means farming farm land, that is land in the State wholly or mainly occupied for the purposes of husbandry, other than market garden land (s.654, TCA 1997) Profits from farming fall within Schedule D Case I Normal rules of Schedule D Case I apply with the exception of stock relief and income averaging

Farming Income Stock Relief – Young Qualifying Farmer Qualifying conditions: Be under age 35 at commencement of tax year in which he/she commences farming Holds recognised certificates or qualifications in farming Qualify for grant aid under Scheme of Installation Aid for Young Farmers First became chargeable under Case I from farming in 2008 or subsequent years

Farming Income Stock Relief – Young Qualifying Farmer 100% stock relief for 4 years Reduces to 25% after 4 years No clawback of relief

Farming Income Stock Relief – Young Qualifying Farmer Applies where closing trading stock is greater than opening trading stock

Farming Income Stock Relief – Young Qualifying Farmer Opening stock at 1/1/15 €20,000 Closing stock at 31/12/15 €25,000 Increase in value of trading stock €5,000 Farming profits for y/e 31/12/15 €7,000 Less stock relief (100%) (€5,000) Revised farming profits for 2015 €2,000

Farming Income Stock Relief – Other farmers Other farmers can claim stock relief of 25% of the increase in value of trading stock

Farming Income Stock Relief – Other farmers Opening stock at 1/1/15 €20,000 Closing stock at 31/12/15 €25,000 Increase in value of trading stock €5,000 Farming profits for y/e 31/12/15 €7,000 Less stock relief (25%) (€1,250) Revised farming profits for 2015 €5,750

Farming Income Stock Relief – Restrictions Stock relief cannot create or augment a loss Capital allowances cannot create or augment a loss when stock relief has been claimed Farming losses forward from previous tax years must be utilised in the tax year in which the stock relief is claimed Unutilised wear and tear allowances from that tax year or carried forward from previous years cannot be carried forward to subsequent years

Basis of assessment Farming Income General Rule The basis period for the year of assessment is the accounting period of 12 months ending in the year of assessment.

Farming Income Income Averaging Option to elect for income averaging Full-time farmers may elect to be charged on the basis of the average of the aggregate farming profits and losses of the 3 years ending in the year of assessment A farmer must stay on income averaging for a minimum of 3 years Applies for years of assessment up to 2014

Farming Income Income Averaging Full-time farmers may elect to be charged on the basis of the average of the aggregate farming profits and losses of the 5 years ending in the year of assessment A farmer must stay on income averaging for a minimum of 5 years For the 2015 year of assessment and subsequent years

Farming Income Income Averaging A farmer must elect for income averaging by written notice within 30 days of receiving an assessment to tax Cannot opt for averaging if a loss was made in any of the two prior tax years Election will remain in force until the farmer either opts out of averaging or ceases to be a qualifying farmer

Farming Income Income Averaging Where farmer opts out of averaging, the immediately preceding tax years’ assessments are reviewed If they are lower than the final year of averaging they will be revised to equal the final year

Farming Income Stallion fees and profits Exempt up to 31 July 2008 Taxable from 1 Aug 2008 Stallions are to be treated as stock in trade A full write off over 4 years of the initial market value is allowed for tax purposes (25%) Includes stallions purchased for stud and transferred from racing

Farming Income Stallion fees and profits Upon disposal or death, write off of the balance of the initial market value is given Applies for stallion owners and members of a syndicate Losses for syndicates are ring fenced and can only be used against future stallion stud income