Forestry sector responds positively to clear-felling tax break

Forestry sector responses to the budget have been largely positive, both for the sector’s overall €113.8m allocation and for targeted tax reliefs.

Forestry clear-felling income is to be tax-free as the “high earners restriction” of €80,000 for active foresters and farmers has been ended.

Simon Coveney, the agriculture minister, said: “Forestry plays a huge role environmentally, economically, and socially in rural areas; and I believe the benefits of this change will be felt long into the future.”

He noted that, in advance of the budget, farmers had sought income averaging over three or five years.

“Instead of that, Revenue has said it is easier to remove the high earners restriction for active forestry farmers, so clear-felling is exempt.

“That goes beyond the expectations and asks of the forestry sector. We need more forestry, planting, and trees and this will be a big incentive to do that.”

The IFA and ICMSA have welcomed the move to make clear-felling income tax-free. A sector which has really begun to take off among the latest generation of farmers, forestry is expected to become increasingly important for young farmers.

Macra na Feirme also welcomes the forestry changes. It also notes positives for the sector introduced in the last run of CAP reforms.

In the new CAP, there is a 25% top-up in the direct payments made to new farmers under 40. This comes in addition to the existing option of installation grants for young farmers under rural development programmes.

Macra notes that, for the first time, EU states also have the possibility of funding “farm and forest management exchange programmes”.

The subject will be addressed by Macra executives at its annual conference next weekend at the Riverside Hotel in Macroom, Co Cork.

The budget has also broadened the SEAI’s accelerated capital allowance scheme for energy efficient equipment to non-incorporated businesses, including foresters.

Mr Coveney said: “A survey by my department indicates that, in response to the changes in last year’s budget, there has been a significant shift from conacre to long-term leasing this year.

"27% of respondents commenced a new long-term lease in 2015 with almost two thirds indicating that it was the first time they had entered a long-term lease.”

Meanwhile, Teagasc and the Forest Service are hosting a conifer-thinning event tomorrow in Kilbrin, Kanturk, Co Cork, on a first and second thinning site.

Many farm forests planted in the early to mid-nineties now require thinning.

“This event will highlight Teagasc conifer research and will provide forest owners with valuable and practical information on the reasons for, and timing of, thinning a Sitka spruce crop, as well as how different thinning regimes can impact on crop development and profitability potential,” said Niall Farrelly, a forestry researcher with Teagasc.

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