Chapter II

Taxation of Farming Profits

12. —(1) Section 13 of the Finance Act, 1974 , is hereby amended by the addition of the following definitions to subsection (1):

“‘rates’, in relation to an individual, means the amount of county rate, municipal rate or other rate payable by the individual or his wife in respect of farm land occupied by him but not including any amount of any such rate in respect of any building on the land or in respect of which he or his wife is, by virtue of section 81 (5) of the Income Tax Act, 1967 , entitled to a deduction in computing profits or gains chargeable to tax under Cast V of Schedule D;

‘tax appropriate to the profits or gains from farming’ has the meaning assigned to it by the Third Schedule.”.

(2) The schedule set out in Part IV of the First Schedule shall be added to the Finance Act, 1974 .

13. — Section 15 of the Finance Act, 1974 , is hereby amended by the substitution in subsection (3) of “£60” for “£75”, and the said subsection (3) (apart from the proviso), as so amended, is set out in the Table to this section.

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(3) Subsection (1) shall not apply, as respects any year of assessment, in the case of an individual who shows that the rateable valuation of all farm land occupied by him did not, at any time during that year of assessment, amount to £60 or more.

14. —As respects assessments for the year 1978-79 and any subsequent year of assessment, Chapter II of Part I of the Finance Act, 1974 , is hereby amended—

(a) by the substitution of the following sections for sections 19 to 21A:

Limit on amount of tax to be charged in certain cases.

“19.—(1) Where, for any year of assessment an individual, other than an individual to whom section 16 applies, is chargeable to tax in respect of profits or gains from farming, the amount of tax so chargeable for that year shall not exceed the amount determined by the formula—

where—

T is the tax appropriate to the profits or gains from farming for that year,

R is the amount by which the tax chargeable for that year in respect of the said profits or gains from farming would have been reduced by virtue of section 21A, if this section had not been enacted,

V is 1 or, if greater, the number equivalent to the amount by which the rateable valuation of the farm land occupied by him for that year exceeds £59.

(2) This section shall not apply in any case where the rateable valuation of the farm land occupied by the individual at any time during the year of assessment exceeds £69.

Basis of assessment.

20.—(1) Where an assessment in respect of profits or gains from farming is made in accordance with the provisions of section 58 of the Income Tax Act, 1967 , on an individual, other than an individual to whom section 16 applies, for any year of assessment (being the year 1978-79 or any subsequent year of assessment), he shall be entitled, on giving, within 30 days after the date of the notice of assessment, notice in writing to that effect to the inspector, to elect to be charged to tax for that year in respect of those profits or gains on an amount determined in accordance with the provisions of section 21 and all the provisions of the Income Tax Acts (including, in particular, the provisions relating to appeals against assessments and payments on account) shall apply in relation to the said assessment as if the notice given to the inspector were a notice of appeal against the assessment under section 416 of the Income Tax Act, 1967 , and the said assessment shall be amended as necessary so as to give effect to the election so made by the individual.

(2) (a) An individual shall not be entitled to elect as provided for in subsection (1) for any year of assessment which is a year of assessment next following a year of assessment for which he has been charged to tax in respect of profits or gains from farming on an amount other than an amount determined in accordance with the provisions of section 21 unless for each of the three years of assessment immediately preceding the first-mentioned year of assessment he has been so charged.

(b) For the purposes of this subsection, the year 1977-78 and preceding years of assessment shall be disregarded.

(3) Where, as respects a year of assessment, an individual duly elects in accordance with subsection (1), he shall be charged to tax for each of the next two years of assessment following that year of assessment in accordance with the provisions of section 21 as they apply in relation to the charging of tax for each of those years respectively:

Provided that this subsection shall not apply for any year of assessment in which the individual—

(a) is an individual to whom section 16 applies, or

(b) is not, by virtue of section 15 (3), chargeable to tax on profits or gains from farming.

Optional basis of assessment.

20A.—(a) Where, for the year 1978-79—

(i) an individual is, by virtue of section 15, chargeable to tax in respect of profits or gains from farming,

(ii) he would not be so chargeable but for the provisions of section 13 of the Finance Act, 1978, and

(iii) an assessment is made upon him for that year in respect of those profits or gains on an amount determined in accordance with the provisions of section 58 (1) of the Income Tax Act, 1967 , he shall be entitled, on giving, within 30 days after the date of the notice of assessment, notice in writing to that effect to the inspector, to elect to be charged to tax for that year in respect of those profits or gains on an amount equal to the amount of those profits or gains of such one of the periods—

(I) the year 1978-79,

(II) the year 1978,

as may be specified by him in the said notice to the inspector.

(b) Where an individual duly elects in accordance with paragraph (a)—

(i) he shall be charged to tax for the year 1978-79 as if the full amount of the profits or gains from farming of the year preceding the said year 1978-79 were an amount equivalent to the full amount of the said profits or gains of whichever of the periods mentioned in paragraph (a) is specified by the individual in the notice given by him under that paragraph, and

(ii) all the provisions of the Income Tax Acts (including, in particular, the provisions relating to appeals against assessments and payments on account) shall apply in relation to the assessment as if the said notice were a notice of appeal against the assessment given under section 416 of the Income Tax Act, 1967 , and the said assessment shall be amended as necessary so as to give effect to the election so made by the individual.

Notional basis of assessment.

21.—(1) An individual, who is to be charged to tax for a year of assessment in respect of profits or gains from farming on an amount determined in accordance with this section, shall be so charged under Case I of Schedule D on an amount determined by the formula—

(V×90)−W−C

where—

V is the rateable valuation of the farm land occupied by him for the year of assessment,

W is the total amount of emoluments payable by him for the year of assessment to persons, employed as permanent employees for the purpose of working the said land, in respect of such work, and

C is the total amount of payments, other than emoluments for the year of assessment to agricultural contractors in respect of agricultural work carried out by them on that land.

(2) In determining for the purposes of this section the rateable valuation of farm land occupied by an individual for a year of assessment, there shall, notwithstanding the provisions of section 17, be taken into account, in relation to any farm land occupied by the individual, or by his wife, in partnership with any other person or persons, only that proportion of the rateable valuation of the farm land so occupied in partnership as bears to that rateable valuation the same proportion as his or her share, as may be appropriate, of the partnership profits or losses on an apportionment thereof made in accordance with the terms of the partnership agreement as to sharing of profits or losses bears to the said profits or losses of the partnership:

Provided that this subsection shall not apply in relation to any farm land occupied by the individual, or by his wife, in partnership with any other person or persons if that other person or any one of those other persons is not chargeable to tax in respect of profits or gains from farming.

(3) In charging profits or gains in accordance with the provisions of this section, no deduction under any of the provisions of the Income Tax Acts shall be made from the amount determined under subsection (1).

(4) (a) In this section—

‘agricultural contractor’ means a person who carries out agricultural work on farm land:

‘agricultural work’ means work which forms an integral part of the cultivation of farm land or the harvesting of the produce of such land and includes the conveyance on or off the land of goods or animals but does not include any work in respect of the cost of which a deduction in computing profits or gains is prohibited by virtue of the provisions of section 61 of the Income Tax Act, 1967 ;

‘emoluments’ has the same meaning as in section 110 of the Income Tax Act, 1967.

(b) For the purposes of this section—

(i) a person shall be regarded as a permanent employee of an individual for a year of assessment if that individual—

(I) is registered as an employer under the Income Tax (Employment) Regulations, 1960 (S.I. No. 28 of 1960),

(II) has, in relation to all emoluments paid by him during that year to the said person, complied with the provisions of the said Regulations, and

(III) (A) has, in respect of that person, paid employment contributions (within the meaning of the Social Welfare Act, 1952 ) for the period or periods during which the said person was employed by him in that year, or

(B) in a case where such employment contributions are not payable by the individual in respect of that person by reason of the employment of the said person being an employment specified in or by regulations under Part II of the First Schedule to the said Social Welfare Act, 1952 , has employed that person on a full-time basis throughout the year for the purpose of working the farm land occupied by the said individual, has paid wages to that person in respect of such employment and, in relation to that person, has complied with the employment regulation orders under the Industrial Relations Acts, 1946 to 1976, in force during that year which would apply if the person were an agricultural worker (within the meaning of the Industrial Relations Act, 1976 ),

and

(ii) emoluments payable by an individual to a person connected with the said individual shall be taken into account for the purposes of the formula in subsection (1) only in so far as the emoluments are paid to that person in cash.

(5) Where an assessment to tax, which consists of, or includes, tax applicable to profits or gains from farming, charged in accordance with the provisions of this section, is being made upon an individual before the end of the year of assessment to which such assessment to tax relates, the inspector shall—

(a) in making the assessment, estimate the rateable valuation of the farm land occupied by the said individual for the said year of assessment and the amount of any payment for that year which is to be taken into account for the purposes of the formula in subsection (1), and

(b) in making any such estimate, have due regard to—

(i) the rateable valuation of the farm land occupied by the individual at any time during the immediately preceding year of assessment, and

(ii) the amount of any payments which would be taken into account for the purposes of W or C in the formula in subsection (1) if the amount to be taken into account were the amount of those payments made for the immediately preceding year of assessment.

(6) Where an estimate has been made under subsection (5) and notice of appeal against the assessment to tax has not been given but, within 6 months from the end of the year of assessment, the individual concerned furnishes particulars for the purposes of V, W and C in the formula in subsection (1), any adjustments in the assessment that are necessary having regard to the difference between the correct amount of profits or gains from farming chargeable in accordance with the provisions of this section and the amount of the said profits or gains charged in the assessment shall be made, and any amount of tax overpaid shall be repaid.

(7) Where for the said year of assessment an individual is chargeable to tax under Case V of Schedule D in respect of the profits or gains from any rent or any receipts in respect of any easement in relation to any part of the farm land occupied by him, subsection (1) shall apply for the year of assessment to the farm land so occupied but excluding that part from which the said profits or gains chargeable under Case V of Schedule D arise:

Provided that this subsection shall not apply where the said rent or the said receipts are, having regard to values prevailing at the time, less than the amount which could have been obtained on the basis that the negotiations for the lease or the easement had been at arm's length.

(8) A person shall, for the purposes of this section, be regarded as connected with an individual if that person would be so regarded for the purposes of section 16 of the Finance (Miscellaneous Provisions) Act, 1968.

Credit for rates.

21A.—(1) Where, for the year 1978-79 or any subsequent year of assessment, an individual is chargeable to tax in respect of profits or gains from farming, the following provisions shall apply—

(a) the amount of tax so chargeable for that year of assessment shall be reduced by the rates payable for the local financial year preceding that year of assessment;

(b) in computing the said profits or gains for that year of assessment, no sum shall be deducted in respect of rates:

Provided that the amount by which the tax chargeable for any year of assessment is to be reduced under this subsection shall not exceed the tax appropriate to the profits or gains from farming for that year of assessment.

(2) This section shall not apply in the case of an individual to whom section 16 applies, and (apart from paragraph (b) of subsection (1)) shall not apply in any case in which section 19 applies.”,

(b) by the substitution in paragraph (a) of section 22 (2B) (inserted by the Corporation Tax Act, 1976 ) of “is” for “elects to be”, and

(c) (i) by the insertion, after paragraph (a) of section 25 (1), of the following paragraph:

“(aa) the said profits or gains had been charged to tax in accordance with the provisions of section 58 of the Income Tax Act, 1967 , and not in an amount determined under section 21,”,

and

(ii) by the insertion, after paragraph (a) of section 25 (2), of the following paragraph:

“(aa) in respect of which he was charged to tax on an amount determined in accordance with the provisions of section 21,”,

and the said paragraph (a) of the said section 22 (2B), as so amended, is set out in the Table to this section.

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(a) is charged to tax, in respect of his profits or gains from farming, by reference to the provisions of section 21, or

15. —(1) No relief shall be given under section 309 of the Income Tax Act, 1967 , in respect of a loss to which this section applies, by deducting such loss from or setting it off against the amount of the profits or gains from farming assessed for the year 1978-79 or any subsequent year of assessment.

(2) This section applies to a loss sustained by a person in the carrying on of farming in any year of assessment, being a year for which, by virtue of section 15 (3) of the Finance Act, 1974 , he was not chargeable to tax in respect of his profits or gains from farming.

(3) In this section “farming” has the same meaning as in Chapter II of Part I of the Finance Act, 1974 .

16. —(1) Section 477 of the Income Tax Act, 1967 , is hereby amended—

(a) by the insertion in paragraph (a) of subsection (2) of “other than tax to which subsection (2B) applies” after “professions”, and

(b) by the insertion after subsection (2A) of the following subsection—

“(2B) (a) This subsection applies, as respects assessments for the year 1978-79 and subsequent years of assessment, to tax appropriate to the profits or gains from farming within the meaning of Chapter II of the Finance Act, 1974 , contained in any such assessment made on an individual, other than an individual to whom section 16 of the Finance Act, 1974 , applies.

(b) Tax to which this subsection applies shall be payable on or before the 1st day of January in the year of assessment for which it is charged, except that where such tax is included in an assessment for any such year made on or after the 1st day of January, the tax shall be deemed to be due and payable on the day next after the day on which the assessment is made.”,

and the said paragraph (a), as so amended, is set out in the Table to this section.

(2) In relation to any assessment to tax made on an individual (other than an individual to whom section 16 of the Finance Act, 1974 , applies) for the year 1978-79 or any subsequent year of assessment in respect of profits or gains from farming, section 20 (2) of the Finance Act, 1971 , shall have effect as if section 6 (2) of the Finance Act, 1976 , and section 4 of the Finance Act, 1977 , had not been enacted.

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(a) tax charged under Schedule D on any individual in respect of the profits or gains of any trade or profession other than tax to which subsection (2B) applies, and

17.—(1) (a) This section applies to any assessment to tax for the year 1977-78 which was made on an individual before the 1st day of November, 1977, and which consists of, or includes, tax applicable to profits or gains from farming charged in accordance with the provisions of section 21 of the Finance Act, 1974 , as amended by section 12 of the Finance Act, 1977.

(b) In this section “the relevant instalment”, in relation to an individual, means an instalment of tax charged in any assessment to tax to which this section applies made upon him, being an instalment of tax which was payable before the 1st day of November, 1977.

(2) Where an individual appeals or has appealed against an assessment to tax to which this section applies—

(a) if the relevant instalment was paid before the 1st day of January, 1978, he shall be regarded, for the purposes of section 550 (1) of the Income Tax Act, 1967 , and section 30 (5) of the Finance Act, 1976 , as having paid the relevant instalment on the date when it became due and payable,

(b) if the relevant instalment, or the full amount thereof, was not paid before the 1st day of January, 1978, then, on the determination of the appeal and for the purpose of determining whether, and, if so, to what extent, interest falls to be charged under section 550 of the Income Tax Act, 1967 , the individual shall be regarded—

(i) as having appealed against the relevant assessment within 30 days after the date of notice of the said assessment,

(ii) as having, in relation to the relevant instalment, specified as the amount to be specified in accordance with the provisions of section 30 of the Finance Act, 1976 —

(I) in a case in which neither the relevant instalment nor any amount thereof was paid before the 1st day of January, 1978, a nil amount,

(II) in a case in which part of the relevant instalment was paid before the 1st day of January, 1978, the amount so paid,

and

(iii) in a case in which subparagraph (ii) (II) applies, as having paid the part of the relevant instalment referred to in that subparagraph on the date when it became due and payable.

(3) In determining any interest charge under subsection (2) (b), the proviso to section 30 of the Finance Act, 1976 (inserted by section 13 of the Finance Act, 1977 ) shall be disregarded.