The total budget for the scheme is fairly modest at 26m. In the context of the relatively high machinery investment requirements of tillage farmers, there is a strong possibility that the scheme will be fully subscribed prior to the envisaged end date of December 31, 2020.
Similar to other schemes, the justification of grant aiding tillage farmers has been approved at EU level on the basis that the investments will benefit the environment, increase efficiency and ultimately lead to growth.
Grant aid is available on investments up to €80,000, and in line with other TAMS 2 scheme, it is expected that farmers will be able to apply under a number of tranches subject to adhering to the overall scheme.
The minimum amount of spend which can meet approval is €2,000. In practical terms this means a tillage farmer can apply for TAMS grant aid approval on a number of different farm improvements, spreading their spend over the coming years.
In the case of registered farm partnerships the grant-aid limit can be increased to €160,000.
The items open for grant aid include farm building improvements such as rewiring, retro-fitting safety roof light sheeting, construction of grain stores whereas the equipment which qualifies for grant aid includes items such as ventilation systems, rainwater harvesting systems, GPS steering control systems, Sprayers with electric or GPS controls, min till cultivators and seeders, heavy rollers and grain dryers.
Grant aid is only payable on the VAT exclusive costs, regardless of whether the individual is VAT registered or not.
The amount of spend which will qualify for grant aid is limited in the first instance by the overall grant aid limit (€80,000/€160,000) but secondly by the departments own costings — their “Reference costs”, the actual price paid by the applicant and the expected costs as submitted as part of application.
The department has not published its reference costings in respect of the Tillage Capital Investment Scheme, meaning that farmers are flying blind as to the quantum of grant aid actually available to them should they decide to invest.
Where farmers over subscribe for funding available in any one tranche, the department can use a marking sheet to prioritise the distribution of the funding.
Unlike the general TAMS 2 measures, the scheme is only open to farmers who have declared a minimum amount of land of 15 hectares (about 37 acres) of tillage in either the current year or the prior year, rather than the 5-hectare limit applicable to the general TAMS 2 measures.
Other conditions which must be satisfied include a requirement to provide the Department of Agriculture with a tax clearance certificate (an access code is issued by Revenue), meanwhile the individual must obtain relevant planning permission for building work.
Applicants must have completed within the last five years prior to the date of application or the submission of their claim for payment, a half day Farm Safety Code of Practice course or alternatively have completed the FETAC Level 6 Advanced Certificate in Agriculture.
From a tax perspective, VAT is reclaimable by unregistered farmers on certain capital improvements to their farm including the construction of new sheds and store, and the installation of fixed equipment such as fixed dryers and ventilation systems.
VAT cannot be recovered by any unregistered farmers on mobile equipment and farm implements.
Meanwhile in relation to grant aid receipt, the net cost after grant aid can qualify for capital allowances allowing an offset of the net cost over eight years against the applicant’s taxable farming income.
Importantly. grant aid will not be paid in respect of new equipment or investments unless full ownership thereof has been transferred to the applicant prior to the lodgement of the payment claim — this suggests that grant aid is not available where a farmer finances their purchase by way of hire purchase or lease agreement— instead farmers needing finance could consider availing of a general business development loan freeing up their ability to make their investment and gaining full ownership at the outset.
As always, individuals should obtain professional advice relevant to their own particular circumstances.