A wave of tax breaks for farmers who have been hit by poor weather and Brexit make up Budget 2017.
Minister for Finance Michael Noonan said that farmers who have had an “exceptionally poor” financial year will have a “step-out” option so they can defer on tax. This tax will then be repaid over the subsequent years. The minister said:
“To assist in the current difficult circumstances I am allowing a farmer facing an exceptionally poor feature, to step out of income averaging and instead pay only the tax due on a current year basis with any deferred tax liability becoming payable over subsequent years. This facility will become available immediately, and should provide cash flow assistance this year.”
Brexit featured numerous times in his speech, with him noting that the growth forecast has been reduced to 3.5% because of Brexit.
Meanwhile the flat rate addition to farmers not registered for VAT will increase from 5.2% to 5.4%, starting this coming January.
Farm restructuring relief will also be extended until the end of 2019. As well as this, there will be a loan fund to help reduce the cost of cash flow for farmers and also reduce the cost of their short term borrowings. Minister Noonan said it would be less than 3 per cent per annum and would be “highly flexible”.
Elsewhere, fishermen will benefit from a tax credit worth up to €1,270 with an income shelter of up to €6,350, which Minister Noonan stated is the equivalent value of the seafarer’s exemption. A scheme that would help attract sole traders to invest in energy efficient equipment was also announced, with details to follow later.
As expected, the threshold for inheritance and gifts from parents to children increased by €30,000 to €310,000. The Rural Development scheme is to see an increase from €107 million to €601 million in 2017. This includes €25 million for the Animal Welfare Scheme for Sheep. There will also be €15 million allocated to the National Broadband Programme.
Despite concerns, there was no increase to the cost of green diesel.
Other measures announced include:
- Payments under Raised Bog Restoration scheme to be exempt from capital gains tax.
- A €44 million flood relief fund.
- First time buyers will get a grant of €20,000 for new homes costing between €400,000 and €600,000.
- The USC rate is being cut by 0.5 per cent on the lower three rates of the charge.
- Overall there is €500 million of tax cuts, while the measures increasing tax revenue are €150 million.