The extended deadline of May 29 for applications for the new basic payment scheme is fast approaching.
However, where applicants are applying for GLAS (the green low-carbon agri-environmental scheme which follows REPS and AEOS), the earlier deadline of May 22 applies.
This year’s basic payment scheme sees the introduction of mandatory online filing for certain elements of the scheme, including:
* Applicants under GLAS.
* Arable farmers, who had 10 hectares or more of arable land under the 2014 SPS Scheme, or who declare 10 hectares or more in 2015.
* Organic farmers who participate in the Organic Farming Scheme.
* Farm partnerships registered with the Department of Agriculture, Food and the Marine’s Register.
* Recognised share farming arrangements applying under the share farming arrangement.
Meanwhile, farm advisors are experiencing unprecedented workloads, given the complexities of this year’s scheme, with issues such as greening, young farmers’ top-ups, and private contract clauses, all new features in this year’s scheme.
Where relevant, it may be worthwhile discussing with your advisor whether your declared farm land requires any amendments, for example, are there corrections necessary to exclude roadways, scrub and other ineligible features?
Taking special care this year is of particular importance, because 2015 effectively offers farmers the opportunity to stack the value of their entitlements over the correct area, and will offer protection from penalties arising from over-declaration of land.
Of course, all single farm payments are converging as we move towards 2019, and where a farmer declares less land in 2015 than was declared in 2013, this effective stacking of entitlements will cause a greater level of reductions.
Meanwhile, farmers who are leasing out land with entitlements should take special care to ensure that the relevant private contract clause (PCC) enabling a tenant to activate their farm payment allocation right is properly completed and submitted to the Department of Agriculture.
These paper documents must be witnessed by a member of Teagasc, an agricultural consultant, or a solicitor, further adding to the backlog.
If your application must be submitted online, and you are not already registered, you should apply immediately online on www.agfood.ie; or you can contact the Agfood Online Services Helpdesk in the Department’s Portlaoise Office, by emailing to email@example.com or telephoning the 0761 064424 Lo call number.
Where you intend on using an agent to submit your form, either online or on paper (for example, Teagasc or your agricultural consultant), ensure those agents are registered in sufficient time.
There are advantages to filing online, with the on-line facility designed to help minimise errors, including alerts to possible area over-claim on a parcel, which will help you avoid a possible penalty.
Where you intend to submit the application by post, ensure your envelope is properly sealed, addressed and posted by Express Post or Registered Post. If your Basic Payment Scheme application is lost or delayed in the post, the Department of Agriculture will only accept these two forms of postal receipts as proof of postage.
From a tax perspective, thankfully, Minister Simon Coveney has recently clarified the tax treatment of entitlements in the context of the transition from the Single Payment Scheme to the Basic Payment Scheme.
Entitlements established under the 2015 scheme will effectively be treated as having been acquired for nil cost, meaning that any future sale, transfer or disposal of entitlements is potentially liable to capital gains tax.
Meanwhile, farmers who purchased entitlements since the scheme was established in 2005 no longer have “single farm payment” entitlements, and although they may qualify for new basic payment scheme entitlements, it appears that Revenue and the Department of Agriculture are considering these new entitlements as a separate asset for tax purposes. On a practical basis, this suggests that farmers who purchased or acquired (such as by gift or inheritance) entitlements since 2005 have a capital gains tax loss. This is because the asset which they purchased no longer exists.
Capital Gains tax losses have value, in that such losses can shelter an individual (or potentially their spouse) from future capital gains. Farmers who purchased or acquired entitlements since 2005 should take the opportunity to consider how best such losses can be used.
Minister Coveney has also clarified that the transfer of a herd number into joint names to facilitate the young farmers top-up is a non-event for capital gains tax purposes, meaning there are no CGT tax implications; but farmers should take special care to ensure other tax implications such as CAT (gift tax) and income tax issues are fully teased out. For example, the registration of a partnership can trigger a ceasing of income averaging.
In summary, given the complexity of this years’ Basic Payment Scheme, farmers would be well advised to ensure their BPS application is correctly submitted on time, having obtained professional advice from an agricultural consultant where appropriate. Farmers should also consider any tax implications arising from this year’s scheme.
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