Self-assessed farmers paid €217m in tax in 2014 according to Revenue
This body of work is particularly useful as it is fact-based rather than subjective, rooted in hard data, but the findings are made yet more useful by layering on information already available from the National Farm Survey (operated by Teagasc).
According to Revenue’s data, there are 129,263 farmers.
In agreement with Central Statistics Office data, the age profile of Ireland’s farmers is skewed heavily toward the older generation.
Just 18% of farmers on Revenue’s system are under the age of 40.
Imagine if just 18% of nurses, or teachers, for example, were under 40!
Over 90% of farmers filed their tax return online in 2013, with over two thirds of farmers using an accountant or tax agent to file their return.
The tax take from self- assessed farmers has increased steadily each year over the past number of years, from approximately €130m in 2011 to €217m in 2014.
Looking closer, the tax take from farmers rose significantly from 2011 to 2012, probably as a result of the introduction of the universal social charge.
Tax paid in the year 2011 would have been predominantly based on earnings in 2010, during which the income levy (as opposed to the universal social charge) applied.
The income levy applied at 2% of income up to €75,036, whereas universal social charge applied at 7%, once income exceeded 16,016.
A second factor leading to the rise in the tax take is the increase in PRSI contributions by the self-employed, from a minimum of €253 prior to 2012 to a minimum of €500 thereafter.
The data set provided by Revenue shows that farm/ industrial building allowances tapered off from a high of €197m in 2011 to €190m in 2013.
However, the reality on the ground is that such allowances are likely to dwindle further in respect of tax year 2014 and 2015, when the allowances under such farm development work expire.
Farm building costs are usually allowed as an allowance over a seven-year period, with a special three-year option available for those who carried out work prior to December 31, 2010.
Farmers continued to invest heavily in their businesses even during the recession, reflected in the increase in general capital allowance claims, rising from €359m in 2010 to €395m in 2013, with 64,609 farmers benefiting from such allowances.
On farm transfers, the report upholds the view that the number of farm transfers is quite low (just 552 farmers claimed retirement relief in 2013, this being a claim for exemption from capital gains tax on the sale or transfer of farming assets).
The number of claimants who availed of Agricultural Relief was similarly low, and stood at 1,581.
Given the population of over 129,000 farmers, the process of farm transfer seems incredibly slow.
Furthermore, the Stamp Duty returns for 2014 suggest just 722 transfers or sales were to young trained farmers (aged under 35).
The disparity between the number of farmers claiming retirement relief on the sale or transfer of land, and those recipients claiming Agricultural Relief points to a significant degree of farm transfers by will or intestacy (no capital gains tax applies in the case of such a transfer).
Cork ranked by far and away the No 1 county for Agricultural Relief claims.
The stamp duty return data also gives a snapshot of the number of transfers between related persons, where the recipient did not qualify for young trained farmer relief.
In 2014, 1,796 such transfers occurred.
However, this data is not useful in judging the pace at which Ireland’s farm businesses are being transferred, because the data would also include transfers of sites between family members since the abolition of the site-to-child exemption in 2010.
Farmers who are not registered for VAT may still reclaim VAT on building works, fixed equipment, and land drainage.
On that point, the report noted that less than 17,000 farmers availed of the opportunity to reclaim VAT under this process.
Given the relatively small number of claims, there is potentially a lot more room for VAT claims by unregistered farmers.
