Forest income in Budget talks
Agriculture Minister Simon Coveney has said income tax rules are leading to piecemeal harvesting of trees, and he confirmed he is asking the Department of Finance to make a commitment on income averaging.
“If there is no income averaging for people in forestry, they will cut a certain amount of trees up until the threshold where taxation kicks in,” he told last week’s Agriculture Committee discussion on his Department’s expenditure estimates for 2015.
“They will harvest maybe 70 acres of trees, but leave the rest of the plantation, so that we have piecemeal harvesting of trees as opposed to being able to clean out 200 or 300 acres, if it makes sense to do that in one year, and averaging the income over four or five years to take into account the taxation treatment. There is real frustration in the forestry sector on this issue.”
IFA Farm Forestry Chairman Michael Fleming has said the High Income Earner Restriction (HIER) is unfairly discriminating against farmers with forestry, who are not high earners, but realise most of their income from the forest at the end of the long growing cycle.
“In the upcoming budget, I am asking the Government to allow forestry income to be declared over a number of taxable years.
"Forest income from clearfell is a once off payment at the end of up to 40 years’ timber growth, and should not be treated the same as other income that falls within HIER.”
He said HIER is negatively impacting on timber production, and leading to inefficiencies in the supply chain, as farmers choose to stagger harvesting operations to avoid the higher earner threshold.
Meanwhile, spreading the tax-free status of forestry income over a number of years is one of the commitments in Fianna Fáil’s recently published agri-food policy document.
