FARMERS contemplating land transfers have been advised to move fast to avoid yet another tax grab by Finance Minister Brian Lenihan.
The minister has signposted that he will deal with capital and transfer taxes in the December budget, said John O’Callaghan of IFAC Accountants.
“Given the reduction in the market value of land and assets in general, coupled with the threat of the abolition or cutback in capital taxation reliefs, I recommend farmers contemplating transfers to consider the benefits of transferring prior to the December Budget and have their plans properly costed for taxation purposes prior to transfers being effected,” said O’Callaghan.
“I agree with IFA’s President Padraig Walshes’ assessment that the Budget will hit farm incomes hard and does nothing to improve competitiveness in the economy and will do nothing to keep people in employment, or will do little to encourage the hiring of additional employees. The farmers I am meeting on a day to day basis accept the necessity to raise additional taxation, but cannot understand how decimating the income of one of the major economic engines in the Irish economy can contribute to our economic recovery.”
He said farmers have been hit by budget taxation changes, like other sections of Irish society, but in addition will suffer substantial income reductions resulting from cut-backs in agriculture schemes.
He said the 17% cut in REPS 4 payments will impact immediately on the 12,000 farmers who have already signed their five year REPS 4 contract. Farmers who joined the scheme in 2007 or 2008 will get to keep their full payment for year one, but will suffer the 17% cut on payments for years two to five. Farmers joining REPS 4 in 2009, or thereafter, will suffer the 17% cut on all five years of their contract.
Mr O’Callaghan said the immediate effect 8% cut in forestry premia will be applied equally to farmers who afforested many years ago, and to new entrants.
He revealed that those dealing in or developing residential land came in for special treatment in the budget.
The special 20% income tax rate which applied to their trading profits has been abolished, thereby exposing such dealings to the top income tax rate of 41%.
This change seems to be retrospective, effective from January 1, 2009.
The use of losses generated in dealing in or developing residential development land have also been severely restricted.
The budget also included the scrapping of the Government’s €28m subsidy to assist farmers in the disposal of fallen animals, and followed last October’s cuts in the suckler cow welfare scheme and disadvantaged area payments, suspension of the Early Retirement and Installation Aid schemes, and deferral of Farm Waste Management grants.
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