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FDC GROUP Agricultural Newsletter
Spring 2014
www.fdc.ie
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(Personal & Corporate),
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Acquisitions Tax/Estate Planning,
Capital Gains Tax, Corporation Tax
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Other Consultancy.
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Auditing, Management Accounting,
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Formation, Company Secretarial,
Corporate Structures.
In this issue...
Farm Income Averaging,
Is It For You?
Why Is Life Insurance
so Important?
Budget 2014 – The
Consequences For Agriculture
Key Agricultural
Commodity Graphs
Cap Reform
2015 To 2020
Vacancies In Fdc Group
FDC GROUP
GENERAL MANAGER’S INTRODUCTION
Jack Murphy - General Manager
EU support of farming and rural Ireland has been clarified with the details of publication
of Pillar 1 and Pillar 2 Grants and Subsidies. FDC’s service support function is available
to assist clients in optimising all farmer/agri-business entitlements.
Financing of farm enterprises remains
critical. The average farmer, according to
a recent Department of Finance survey,
has bank debt of €78,000. There is a
pressing need for long-term capital at
competitive rates. The withdrawal of
ACC from the market further illustrates
the dependence on the remaining �Pillar
Banks’ for vital medium and long-term
lending facilities. It is essential that credit
to farmers is affordable.
The decision to retain the existing payand-file deadline is to be welcomed.
We at FDC are ever mindful of our
individual client’s annual schedule of
Direct Payments, debt management and
tax compliance. Any significant alteration
of the existing deadlines in 2014 will
prove highly disruptive. 2014 will also
see a general review of taxation policy
conducted by both the Departments of
Finance and Agriculture.
2013 marked the 40th anniversary of
the formation of FDC coinciding with
Ireland’s accession to the EEC. Many
of the benefits due to accrue from
membership were quickly dissipated
by the immediate oil crises, interestrate rises and gross economic mismanagement of successive governments.
FDC has supported the modernisation
of Irish Agriculture through its everexpanding range of services and
extensive office network.
Fundamental to our growth has been
the delivery of personalised professional
services to our clients in meeting the
challenges that continue to arise. I thank
you for your continued support and wish
you every success in the year ahead.
Jack Murphy
Appointments
Robbie Barry
Pat Donnelly
Robbie Barry joined FDC Financial
Services in 2013 with extensive
experience as a Qualified Financial
Advisor (QFA) holding a Diploma in
Pensions (LIAP(d)) through the LIA.
A graduate of Waterford institute of
Technology, he obtained a Diploma in
Business Studies and Financial Services
and Certificate in Business Studies.
Pat Donnelly joined FDC Financial
Services in January 2014. He is a
Qualified Financial Advisor and a
member of the Institute of Bankers.
Robbie provides tailored personal
financial advice in all areas of Wealth
Management including Pension,
Protection and investment.
2
Pat has in excess of 25 years experience
in Wealth Management & joins FDC
having previously worked as a Senior
Financial Consultant for AIB Bank.
Agricultural Newsletter
Spring 2014
FARM INCOME AVERAGING, IS IT FOR YOU?
Alan Barrett - Consultant FDC Carlow
Instead of being charged to tax on their farming profits in the normal way, full-time farmers may elect to be charged on the basis of
the average of the aggregate farming profits and losses of the three years ending in the year of assessment. Effectively, farmers are
charged on one third of the profits over a three-year period.
With the evident unpredictability of farming income due to variables such as weather, yield and prices farm income averaging offers
farmers a legitimate means of reducing exposure to higher-rate income tax. For example, the average milk price in 2009 of 22.36c
per litre rose to 33.11c per litre in 2011 generating a 50% increase in farm income and consequent increase in income tax liability.
Many farmers elected to be assessed on an average of the three years in order to minimise their income tax bill liability.
Rules governing farm income
averaging
•You must be a full time farmer to
qualify. A full time farmer is described
as an individual who is not:
1. At any time in the tax year carrying on
another trade/profession either solely or
in partnership.
2. At any time in the tax year a
director or employee of a company
and who controls directory in
indirectly 25% of the company.
• Once an election for averaging is made,
a farmer must remain on averaging
for a minimum of three years.
• If the farmer wishes to revert back to
the normal basis of assessment, the two
years of assessment immediately before
the final year of averaging are reviewed.
• A farmer who avails of income
averaging and enters into a Milk
Production Partnership can continue
averaging farm profits under the
terms applicable if he or she had
continued farming as a sole trader.
• An election cannot be made where
an individual has made a loss in
any of the previous two years.
3
FDC GROUP
Example of an individual opting for
averaging.
2011 profits
2012 profits
2013 profits
€23,000
€27,000
€45,000
€95,000
The 2013 average profit would be €31,667
(€95,000/3). This would be a significant
tax saving and also taking the individual’s
2013 profits out of the higher rate of tax.
There is also a chance if profits are reduced
in the later years to keep the individual
out of the higher rate and thus achieve an
overall tax saving.
Electing out of averaging
An individual may opt out of income
averaging basis provided he has been
assessed on the average basis for the
immediately preceding three tax years.
The immediately preceding tax years
assessments are reviewed.
loses out on income tax. Qualifying farmers
should always be mindful that if they
choose to elect for income averaging that
they will save in the first tax year, however
if their profits decrease then they will be
exposed to a higher tax liabilities if profits
subsequently decline.
2012 average profit
2011 average profit
2010 average profit
Given the volatility of farming incomes
it is essential to plan in order to minimise
income tax liabilities. Our advice to
farmers is to constantly monitor profitlevels in order to stay one step ahead.
FDC accountants can assist you in
determining the most tax-efficient
outcomes and provide expert guidance well
in advance of pay and file tax deadlines.
€28,000
€25,000
€23,000
To get out of averaging the individual
must pay tax on profits of €3,000 in 2011
(€28,000-€25,000) and €5,000 in 2010
(€28,000-€23,000)
Income averaging in the above scenarios
show where the farmer both saves and
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390 2014
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Age
20
20
19
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21230 230
23 130
Jan Feb
JanMar
Feb
Apr
Mar
May
Apr
Jun
May
Jul
Jun
Aug
Jul
Sep
Aug
Sep
Nov
Oct
Dec
Nov
JanMar
Feb
Mar
Apr
May
Jun
Jul Sep
Aug
SepNov
OctDec
Nov
Dec DecJan Feb
JanMar
Feb
Mar
Apr
JanMar
Feb
Mar
Apr
May
Jun
Jul Sep
Aug
Sep
OctDec
Nov
Dec DecJan Feb
Jan
Feb
Mar
Apr
May
Jun
JulOct
Aug
Sep
OctDec
Nov DecJan Feb
JanApr
FebMay
MarJun
AprJul
MayAug
Jun
Jul Oct
Aug
Sep
Oct Nov
JanApr
FebMay
MarJun
AprJul
MayAug
Jun
Jul Oct
AugNov
Sep
Oct Nov
Jan
Fe
Value (€)
74.81
85.46 227.28 285.03 323.65 318.76
* 2010-11
2010-11
price
price
the isbase
the price
base133.88
including
price including
the in-spec
the
in-spec
quality
quality
assurance
assurance
bonusbonus
Value
(€) *Top
1/3 is
116.09
300.87
359.47
407.82
421.55
Accurate mart prices, only
in the Irish Farmers Journal
Agricultural Newsletter
Spring 2014
7,515
KEY AGRICULTURAL COMMODITY GRAPHS
YearlyComparison
LivestockWatch
LivestockWatch
Factory
Factory
bullocks:
bullocks:
Steers
Factory
Factory
heifers:
heifers:
Weanling
Bulls
Factory
Factory
cows
cows
Heifers
Dairy
Dairy
bull
Weab
BUSINESS
Farming
index: The weekly guide to farming by
YearlyComparison
h
Value (€) Bottom 1/3
37.16
40.63 148.23 208.92 213.57
-21.79 -18.95 -14.46
Average
pricefactory
for 300-400kg
weanling
(c/kg)
R Grade
cows (cent/kg
DW)heifer
incl VAT
216.00
Under 30 months
40.76
(€/tonne)
(€(cent/kg)
/tonne)DWsteer
R Grade
factoryprice
heifers
incl (c/kg)
VAT *
Average
price per
at Bandon/Blessington
Average
for 500-600kg
Average
pricehead
for 400-500kg
heifer (c/kg)
Est forward price for Mar/May: €229.5/tonne
Est forward price for Mar/May: €200/tonne
270 410
320
250 250
500 250
320
The
Frie260past week has seen a large increase in bull calf prices.
2012 225 300
240
480 240
300
390
2012
250 and Holstein bull calf prices have dropped and are selling230
sian
230
200 280
460
280
370
240 €75 to €85 per head. Calves are being sold younger than
220
2013
from
220
2013
260
175 260
440
230 350
2012
210 2014
2012
210
last
year by a few days. Jersey bull calves are2013
selling at €28
on
2013 2012150 240 2014
240
420
220
200
2012
2012
330 Angus bulls are selling from €150 to €300
200
average.
(average
220
125 220
400 2014
190
2013
2013
20132012 210 2014 2014
2012
190
2013
200 310
200
€227).
Heifers are selling from €200 to €215.2012
Continental
calves
180
200
100
380
2014
180
rs Journal 22 February
190 2014
2014
170
290 from €210 to €420 depending on quality.
are selling
180 2014
75 180
360
2013
170
180
160
270
160 160
50 160
340
170
150
140
140
250
25 140
320 150
160
120 140
150 230
0 120
300
130 J
F M A M J J A S O N D
J F M A M J J A S O N D
Weanling
Heifers
er 30 monthsDiff since
Factory
cows-6.78
last
week
-6.65
lincl
(c/kg)
VAT *
Factory
heifers:
Steers
Rolled
barley
Dairy
bullwheat
calves
Heifers
Rolled
BUSINESS OF FARMING
Wea
270
260
250
240
230
220
210
200
190
180
170
160
150
65
DODQFHRISRZHUoUPO\LQVHOOHUV
KDQGV
YearlyComparison
pNov
OctDec
Nov Dec
Jan Feb
JanMar
FebApr
MarMay
AprJun
MayJul
JunAug
JulSep
AugOct
SepNov
OctDec
Nov Dec
Jan Feb
JanMar
Feb Apr
MarMay
Apr Jun
May Jul
Jun Aug
Jul Sep
Aug Oct
Sep Nov
Oct Dec
Nov Dec
Jan Feb
Jan Mar
Feb Apr
MarMay
Apr Jun
May Jul
Jun Aug
Jul Sep
Aug Oct
Sep Nov
Oct Dec
Nov Dec
Averag
E
575
550
525
500
475
450
425
400
375
2014
350
325
300
275
J
Jan Feb
ng the in-spec quality assurance bonus
day), with most plants paying
Steers
it to their advantage. Base
Heifers
Sunflower meal
Lambs and hoggets: Week(ending
18/02/2014
€/tonne)
€5/kg toprice
€5.10/kg.
Processorssteer
quotes
on Monday started at Average price for 400-500kg heifer
Average
for 500-600kg
(c/kg)
(c/kg)€207/tonne c/kg
680 Est forward price for Mar/May:
appear to have lost the upper
€4.70/kg but factory agents
310
270
250
hand and are no longer able
were unable to source suf- 250
2012
620
260
240 290
240 to negotiate prices on their
oFLHQWQXPEHUV$VDUHVXOW
250
230
230 own terms.
base quotes have increased to 270
240
220 250
2013
560
220
Producers have also suc€4.80/kg at Kepak and Dawn
230
210
210 cessfully negotiated payment
230 2014
2014
Ballyhaunis and 2012
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2014
440 Farmers Journal S 22 February 2014
14
Farmers
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er has dried up Irish
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2013 Lambs 190
170 2013 Hoggets
and so too have 170 tions are that the trade is
number of factory agents 160 150
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mbers. Processors
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etermined to keep
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250
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240
260of €5.24/kg
310
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210 2014
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The advice to sellers is
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from 6c/kg to 10c/kg.
proved at the meat plants and
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to price around for the best
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Mar/May:
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ier. This week, one pliers and as producers are
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quote £3.90/kg (€4.73/kg
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550
550
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280
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280
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320
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370
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280
280
280
330
330
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270
270
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200 better
190
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ing from €140 for aged ewes
260
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240
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and
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at
2014
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across
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quoted as €228/t, a €3/t 270
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220
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ing date and ewe condition
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JAMES TAYLOR
IRISH FARMERS JOURNAL
Maizemeal
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5
FDC GROUP
Why is life insurance so important?
Conor Reen - QFA BSc
Most of us know that we need to protect ourselves, our family and homes against the financial hardship that could be caused by an
illness or death in the family. There is a vast array of insurance options available and new products entering the market all the time.
As a result, it can be confusing and complicated. This article aims to provide clear and concise information about the different types
of life insurance and additional benefits available, so that you can make your decisions with confidence.
Protecting your family with life insurance
is one of the most important financial
decisions you can make. It means your
family will receive a lump sum or a
regular income in the event of your death,
becoming seriously ill or being unable to
work because of an illness or injury. This
could assist greatly maintaining their
standard of living and make sure that your
children can avail of the opportunities
you would otherwise directly afford them.
Perhaps you are wondering why you should
pay for an unforeseen contingency?
As with home or health insurance, life
6
insurance requires a prudent assessment of
the need to mitigate risk.
This article details the different types of
Life Cover and all the additional benefits
which can be attached to the policy. Life
Cover can be divided into five different
cover types.
Level Term Cover
This is the most popular and affordable way
to buy life cover. It pays your family a lump
sum if you die within a certain period of
time, which you decide at the outset of the
policy. It is possible to have a conversion
option added to this policy which allows
you to extend this policy until age 85
should you wish, with no further medical
underwriting needed. However, unlike
Whole-Of-Life Cover, your Level Term policy
will end and your cover will cease.
Mortgage Term Cover
This cover is required in conjunction with
your mortgage, this type of cover pays off
your mortgage upon death. You take out
the cover for the term and amount of your
mortgage and your cover reduces each
month as the amount you owe on your
mortgage reduces. Mortgage Term Cover
Agricultural Newsletter
Spring 2014
will only pay your mortgage upon death
of the policy holder; it will not provide any
other benefits.
Whole-of-Life cover
As the name suggests this plan provides
you with life cover for your whole life, as
long as you make your regular payments
this type of cover will pay your family a
lump sum when you die. This type of cover
is generally reviewable every 5 years, at
which time the cost of your cover could
increase. This type of cover is typically the
most expensive form of cover as it is linked
to your age. Whole-of-Life cover can be
used to protect your family from having to
pay inheritance tax when you die and you
can also use it to cover funeral expenses.
Pension Term Cover
This type of cover can only be taken out by
people who are eligible to contribute to a
private pension due to being self-employed
or being in a job where no pension scheme
is offered. It is important to note that you
do not need to be contributing to a pension
in order to take out Pension Term Cover.
This life cover pays your family a lump sum
if you die during the term of the plan.
You decide the term of the policy but it can
only be put in place until your retirement
age. The advantage of pension term cover
over other life cover plans is that it costs
less because you can claim income tax
relief on your payments.
Monthly Income on Death Cover
This cover replaces your income for a
set period of time to keep your family
living in the manner that they are used
to. You decide the term of the cover and
the level of the income to be replaced at
the outset of the policy. This is a cheaper
type of cover than Level Term Cover as
it is essentially a decreasing cover. A 20
year term policy with €1,000 of monthly
income cover is initially providing you with
€240,000(€1,000 x 12months x 20years)
of cover but after 15 years with 5 years left
on the policy you will only be covered for
€60,000 (€1,000 x 12months x 5years) as
the €1,000 monthly payment will only be
paid for the 5 years. People tend to take
out this cover due to the fact that they
believe their family would manage better
with a regular income instead of one large
lump sum payment and as it is cheaper you
can take out an initial higher level of cover
for less money.
There are a number of additional benefits
provided by life companies which can
be added to life cover policies. The main
additional benefit which is provided by all
life companies is Specified Illness Benefit
which is sometimes known as Critical Illness
Benefit provides a lump sum payment on
the diagnosis and certification of certain
illnesses which are set out in the contracts.
Most life companies cover at least 66
illnesses ranging from cancers to heart
attacks and strokes. This benefit is more
expensive than life cover as there is a far
greater chance of it being paid out. Many
people take this benefit in order to avoid
the dual challenges of financial hardship
and critical illness. This payment can be
used to maintain your standard of living as
well as pay for medical costs arising.
that the Life Assured spends in hospital as
a result of an accident or illness.
New Ireland has a unique rider Whole
of Life Benefit which can be attached to
their Level Term Policy. This provides an
additional lump sum payment on death,
however this benefit remains in force even
after the term of cover and premiums have
ceased.
The final benefit which may be of interest
is the Best Doctors Benefit which is
provided by Aviva and is now automatically
attached to all their life cover policies.
Best Doctors is a world class second
opinion service which provides access to
the pooled knowledge and experience of
50,000 specialists from around the world.
Best Doctors Benefit provides an in-depth
review of your medical files to assist in the
confirmation of your diagnosis and to help
develop an appropriate treatment plan.
As our circumstances change so do our
individual needs and requirements for life
cover, this is why it is important to regularly
review our life cover policies. FDC Financial
Services can review your existing life cover
policies and guide you through the range
of options and benefits to ensure you have
the most appropriate cover in place.
Hospital Cash Benefit is an additional
benefit which can be added to most life
cover policies. Hospital Cash Benefit
provides a daily cash benefit for each day
7
FDC GROUP
CAP Reform 2015 to 2020
Ted Horgan - Agricultural Consultant
The recent agreement on CAP Reform reached by Minister Coveney as chairman of the Council Of Farm ministers has brought to an
end a period of uncertainty for Irish farmers. The announcement of The Basic Payment Scheme to replace the Single Farm Payment
Scheme and the implementation of the “Internal Convergence Model” to gradually redistribute funds between those farmers who
hold high and low value entitlements was well flagged but the detail was missing up to now. The announcement of a €580 Million
Package under the Rural Development Program should instil further confidence in all sectors of Irish Agriculture.
The key measures of the CAP Reform Agreement are as follows:
• Ireland’s allocation for direct payments
to farmers will be just over €1.2 billion
per annum in the period to 2020.
• The Single Payment Scheme will be
replaced by the Basic Payment Scheme.
• Ireland will implement the �Internal
Convergence Model’ of redistribution
of funds between farmers largely
based on the original presentation
of that model by the Minister at
farmers’ meetings in October 2012.
8
• This model, while initially retaining
the link with current payments under
the Single Payment Scheme, gradually
moves all farmers towards a national
average value over the five years of
the new scheme but does not arrive
at a �flat-rate’ until 2019. The intention
is to introduce a fairer more equitable
distribution of funds between farmers
while avoiding the negative impact
of a sudden move to a �flat-rate’.
• Farmers who hold entitlements with a
unit value below 90% of the national
average value will be increased by
one third of the difference between
their starting value and the 90% level
over the five years of the scheme.
• Farmers who hold entitlements
with a unit value over 100% of the
national average value will see their
value decrease over the period of
the scheme. The reduction will be
determined by the amount needed
to fund the increase for those whose
entitlement value is being increased.
Agricultural Newsletter
Spring 2014
• By 2019 all entitlements will
have a minimum value of 60% of
the national average value.
• No farmer will receive a payment
under the Basic Payment Scheme
of over €150,000 per annum.
• By 2019 no farmer will receive a payment
per hectare (Basic Payment plus Greening
payment) greater than €700.00.
• Farmers who never held entitlements,
either owned or leased, under the current
Single Payment Scheme but who actively
farmed in 2013 will be eligible for an
allocation of entitlements in 2015.
• Farmers who produced �fruit and
vegetables’ in 2013 but did not receive
a direct payment in that year, and
consequently do not have an automatic
�allocation right’, will be eligible for an
allocation of entitlements in 2015.
• Young Farmers Scheme: Ireland will
establish a Young Farmers Scheme
the purpose of which is to encourage
the participation of young farmers
in agriculture. The scheme will assist
young farmers in the initial stages of
establishing a farming enterprise in
their own name by providing a �top-up’
payment on the payment they receive
under the Basic Payment Scheme.
• Ireland will allocate the full allowable
amount of 2% of its national ceiling
to the scheme in 2015. Percentages
to be applied in subsequent years
will be determined by demand.
• The payment is available for a
maximum of five years from the date
of the establishment of the holding
in the young farmer’s name.
• A Young farmer is defined as being
aged 40 or less in their first year
of application to the Basic Payment
Scheme and having established their
holding within the previous five years.
In addition, successful applicants will
have completed a recognised course of
education in agriculture giving rise to an
award at FETAC level 6 or its equivalent.
• The Young Farmers payment will be
calculated as 25% of the national
average payment per hectare (based
on the national ceiling) multiplied
by the number of entitlements
activated by the young farmer subject
to a maximum number of 50.
defined as persons who commenced
their agricultural activity in the 2013
calendar year or any later year and did
not have any agricultural activity in
their own name and at their own risk
in the five years preceding the start
of the agricultural activity. As with the
Young Farmers Scheme, successful
applicants will have completed a
recognised course of education in
agriculture giving rise to an award
at FETAC level 6 or its equivalent.
• Greening: Farmers who participate
in the Basic Payment Scheme must
implement the three standard
greening measures as follows;
1. Crop diversification
2. Permanent grassland
3. Ecological Focus Area (EFA)
• National Reserve: Ireland will establish
a National Reserve using 3% of the
ceiling allocated to the Basic Payment
Scheme in 2015. This is a once-off
allocation and in subsequent years
the Reserve will be replenished from
the return of unused entitlements.
• Priority for the allocation of entitlements
from the Reserve will be given to
�young farmers’ and to those who
�commence their agricultural activity’
i.e. new entrants to farming. In all
cases, allocations of entitlements
from the Reserve will only be given to
persons who are �active farmers’.
• The definition of �young farmer’ is the
same as that under the Young Farmers
Scheme. A �new entrant to farming’ is
• The greening payment will take the
form of an annual payment per hectare.
The payment will be calculated as a
percentage of the payment the farmer
receives under the Basic Payment
Scheme. The same percentage
will be applied to all farmers and
greening will represent some 30%
of each farmer’s total payment.
• There are a number of scenarios where
a holding or part of it may be considered
as �green by definition’ and there is no
further obligation to implement the
three greening standard measures.
Two of the most significant are;
• Land that is subject to organic farming
practices automatically fulfils all
9
FDC GROUP
greening requirements. However such
exemption only applies to that part of
the holding which is farmed organically.
• Holdings where more than 75% of the
eligible agricultural area is permanent
grassland or is used for the production
of grasses or other herbaceous
forage have no further obligation to
implement the three greening measures,
provided the remaining arable area
does not exceed 30 hectares.
The Key Measures under the Rural
Development Programme 2014-2020
are as follows:
• The proposed new agri-environment/
climate measure - GLAS (Green, Low
carbon, Agri-environment Scheme).
A maximum payment of €5,000 per
10
farmer will apply, and it is expected
that there will be up to 50,000 farmer
participants at its peak. The Scheme
will target specific environmental
challenges facing the sector as well as
focusing on biodiversity, water quality
and climate change issues in certain
key areas. It will be designed to deliver
real environmental benefits and will
require significant action by farmers on
environmental challenges including those
identified in the recent environmental
assessment of Food Harvest 2020.
• It is also proposed that, within budget
limits, a GLAS+ payment would be
put in place for a limited number
of farmers who take on particularly
challenging actions which deliver an
exceptional level of environmental
benefit. It is proposed that this additional
payment will be up to €2,000.
• Continued support for disadvantaged
areas – now known as Areas of
Natural Constraint (ANCs).
• It is proposed that support to farmers in
these areas will continue at its current
level, with payments to the tune of about
€195 million per year. A full review of
the scheme will be necessary, before
2018 at the latest, when the areas
classified as ANCs will be redesignated
using new bio-physical criteria.
Incentives for on-farm
capital investment:
• The investment areas covered under
this measure will support a number
Agricultural Newsletter
Spring 2014
of key policy priorities, including:
Targeting support at key sectors to
enable growth and expansion, including
Dairy Farming in the context of the
abolition of milk quotas in 2015.
• Support for capital investment on beef
farms to contribute to environmental
and climate change objectives,
support infrastructural development
on farms, improve animal health
and welfare and farm safety,
• Contributing to environmental
and climate change objectives,
• Supporting increased efficiency of
holdings, e.g. through support for
farm infrastructural investments,
• Improved animal health and welfare.
• Support for Young Farmers:· A separate
strand of the support for on-farm capital
investment will be ring-fenced for young
farmers setting up for the first time
as the head of an agricultural holding.
This will provide a dedicated support
for young farmers by offering a higher
rate of aid intensity of 60% for young
farmers investing in key physical assets.
• Knowledge Transfer and
Innovation Measures
• Knowledge Transfer groups will be
designed to improve farmers skills
and to address competitiveness.
Areas to be addressed include skills
related to financial management,
animal health, grassland management,
carbon efficiency and breeding,
• A targeted advisory service on
animal health and welfare will assist
in the provision of farm-specific
advice in relation to matters such
as BVD and Johnes Disease, as well
as the control of elevated somatic
cell counts. This measure can help
address issues which add significantly
to the costs of individual farmers,
• A range of specifically targeted
on farm training measures and
support for continued professional
development of advisors.
Collaborative and
Quality-Focused Measures:
• Support to partly offset the start up
costs of approved collaborative farming
arrangements. In the context of the dairy
sector this has the potential to assist
new entrants to the sector, to encourage
young farmers into the farm enterprise,
to encourage intergenerational transfer
and to improve efficiency at farm level,
• Support for quality schemes,
which will assist groups of farmers
in developing proposals for the
marketing of distinctive local products
through the EU programmes.
A New Beef Data and
Genomics Measure
• Up to €52 million per year will be
spent on a new, highly innovative beef
data and genomics measure which will
support farmers who participate in a
programme to significantly improve
the genetic quality of the beef herd.
• Using genomics to increase genetic
improvement in cattle, Ireland can
further exploit its advantage of a green
grass-based production system by
producing beef animals which maximise
productivity per unit of input and which
can also accrue substantial benefits
in terms of traceability and quality.
• This will drive improved genetic
performance and production efficiency
in suckler herds, as well as delivering
improvements in animal health and
welfare, and environmental sustainability.
• It can also provide the basis for a genetic
traceability system in the future.
• Estimated costs of the programme
are based on €80 per calved
cow for approximately 650,000
participant calved cows.
Organic Farming Organic Farming
Scheme to be continued:
• Core requirements for organic farmers
would be the same as for those in
GLAS, with Organics incorporated
into GLAS as a priority action.
• Organic farmers meeting existing
requirements under the rural
development regulation would
top-up payments by complying
with other GLAS criteria.
11
FDC GROUP
Budget 2014 – the consequences for Agriculture
Donncha Collins - BCL CPA CTA TEP
The 2014 Budget was eagerly awaited by the farming community due to the Minister of Finance’s proposal to fundamentally
overhaul the current Capital Tax regime.
There had been much speculation prior to the budget that significant changes would take effect. As has now become a regular
occurrence, frantic tax restructuring was undertaken to pre-empt these changes. Rumours abounded that significant changes were
to be made to Stamp Duty, Capital Gains Tax and Capital Acquisitions Tax further raising these taxes above their already punitive
levels.
Let us thus examine the actual Capital Tax
changes which have been proposed for the
Farming Sector. At the time of writing we
have to hand the Finance Bill, a precursor
to the Act which gives final legislative
effect. Amendments may arise during the
Committe stages but the broad parameters
are examined below.
Stamp Duty/Stock Relief
There was no alteration of the existing
Stamp Duty rates. The rate applicable
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to transfers of farm land remains at 2%
between unconnected parties, as defined,
and 1% between connected parties as
defined.
The Young Trained Farmer Stamp Duty
Relief for qualified farmers below the
age of 35 years continues and remains a
very attractive relief in promoting farm
transfers. The support for this relief by
Government is evidenced by the extention
of the relief to include new courses.
The enhanced Stock Relief for Young
Trained Farmers of 100% remains.
One note of caution relates to the
enhanced Stock Relief available to those
in registered partnerships. In order to
avoid the need to obtain approval from
the EU on this enhancement, the Revenue
Commissioners are required to spread and
restrict the claim over a period of 3 years.
Agricultural Newsletter
Spring 2014
Capital Acquisitions Tax (CAT)
Of all the taxes, the absence of any change
in CAT was most surprising. It was this tax
to which the Minister specifically referred
last year and around which most of the
rumours centred.
It was expected that the Agricultural Relief
rate would drop from 90% to 75% and the
tax rate would rise incrementally from 33%
to 35%.
The only reference to CAT in the speech
was that a complete review was underway
and that the outcome of that examination
would be revealed next year.
Capital Gains Tax
There were some amendments introduced
to the tax and most were favourable.
Retirement Relief:
The Bill (section 41) extends the operation
of Retirement Relief. The Relief applies
in situations where a parent leased land
for a period of less than 15 years and
subsequently disposed of it to a child. The
Relief did not apply for any disposal where
the land was leased and subsequently
disposed of to a non-child by which
Retirement Relief was not available to any
individual who ceased working the lands.
The new section extends the Relief to
an individual who leases the land and
subsequently disposes of it to a non-child.
The leasing has to be for less than 15 years
and has to consist of lease periods of at
least 5 years.
We have also been informed that much
confusion arose in relation to the maximum
relief available. Revenue had suggested
that the limits of €750,000 / €500,000,
applied to lands that were leased and
subsequently transferred to a child. At the
Committee stages of the Bill, clarification
was sought from Revenue on this point.
Agreement has now been reached
such that the disposals to a child after
leasing, will qualify for the higher limits
of €3Million/unlimited.
Base Cost where debt
is written off:
This amendment addresses a topical
development in the property market.
When calculating CGT liabilities, one is
entitled to deduct the cost of the asset
when it was acquired. Revenue noticed
that a significant number of tax payers
were deducting the full cost of the asset,
even in situations where they had not paid
in full for the asset,. This arose where the
taxpayer had defaulted on the bank loan
or taken to purchase the asset and the tax
payer had succeeded in having the bank
write off some of that debt.
The Revenue took the view that the
taxpayer was claiming a deduction for
more than the actual economic cost of
the asset.
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FDC GROUP
Section 40 of the Bill, now holds the
deductible base cost will be reduced by the
amount of the debt written off. Additionally
it addresses scenarios where the debt is
written off some time after the asset has
been disposed of. In this case, where the
taxpayer had claimed a deduction for the
full cost and subsequently succeeded in
obtaining a write off of some of the debt
a separate and new Chargeable Gain will
accrue in the year of write off.
CAPITAL GAINS TAX EXEMPTION:
The Capital Gains Tax property incentive
relief for properties bought between 7
December, 2011 and 31 December, 2013,
is being extended by one year to include
properties bought to the end of 2014.
CAPITAL GAINS TAX
ENTREPRENEUR RELIEF:
A Capital Gains Tax incentive is being
introduced to encourage entrepreneurs
who have disposed of assets, to reinvest
those sale process in assets for the
purposes of a new trading activity. The
new trade must commence in the period 1
January, 2014 to 31 December, 2018.
The Relief directs that if the new
investment asset is held for 3 years and
then disposed of, the CGT payable on
the disposal of the trading asset, will be
reduced by the lower of ;
(a) the CGT paid on the disposal of the prior
asset and,
(b) 50% of the CGT due on the disposal of
the new trading asset.
14
It is important to note that when this relief
was announced in the Budget Speech, the
phrasing used by the Minister suggested
that the tax advantage or reclaim would
occur once the new trading asset was
bought. This is not the case, the advantage
only arises once the trading asset is held
for at least 3 years and then disposed of.
This presupposes that a gain arsies on the
sale of the new asset.
There are so many variables relating to this
relief that we are doubtful of its practical
application.
Conclusion
The Budget 2014 changes to the Capital
Tax regime and their impact on the
Farming Sector were minimal. However,
it would be wrong to seek medium term
re-assurance that �the worst is behind us’
in relation Capital Taxes. The importance
of maintaining the Agricultural Relief
rate at 90% is paramount in light of the
cumulative reductions in the Class Free
Thresholds (reduced by 60%) and the
increases in the tax rate (from 20% to
33%).
Couple that with the increase in CGT from
20% to 33% and the onerous limits being
placed on Retirement Relief, one can
surmise that the Coalition Government will
seek to extract more wealth/taxes from the
assets held by taxpayers as witnessed with
the introduction of the Local Property Tax.
An obvious target are the lands held by
farmers.
It is imperative that you review
your current personal and financial
circumstances and seek professional advice
available throughout the FDC branch
network and effect any actions required to
legitimately minimise your tax liabilities.
Agricultural Newsletter
Spring 2014
Vacancies in FDC Group
FDC is a multi-disciplined service provider to a diversified range of clients in Southern Ireland (half of its clients are farmers).
Job Title: AREA MANAGERS (2)
FDC now wishes to appoint Area Managers in East Cork/South Tipperary.
Applicants must have:
3. Determination to deliver a quality
1. An appropriate Accountancy/
service to clients and to expand
Agri/third-level qualification and a
and develop FDC’s business.
number of years experience in client
4. Proven business ability.
consultancy, business advice
2. Excellent organisational, communication
These are long-term career
and interpersonal skills, including
appointments.
management and motivation of staff.
The successful candidate will be part
of the Senior Management Teams in
the Regions. FDC offers an excellent
remuneration package and career prospects,
including future equity participation.
References will be required.
Job Title: IT SUPPORT ENGINEER
FDC IT Solutions are looking for an enthusiastic, business minded problem solver to join their IT team.
The role will involve a mix of Project work across a range of technologies, along with Operational Support
of existing systems within the Group as well as IT support for External Clients.
Essential Skills
• Degree in Computer Science or
equivalent experience in a similar role.
• Ability to troubleshoot Hardware/
Software issues on Servers, PCs, Laptops,
Printers, Network Devices (Access
Points, Switches, Modems, etc).
• Excellent Problem-Solving Skills.
• High Level Understanding of Microsoft
Operating Systems
- these include Windows Server
2003, Windows Server 2008,
Windows XP, and Windows 7.
• High Level Understanding of Linux
Operating Systems (Ubuntu).
• Knowledge of Windows/Linux Batch
Scripting for maintaining PCs and Servers
• Practical knowledge of Network
Protocols, DNS, VPNs, etc.
• Ability to set up Wired/Wireless
Networks & VPNs.
• Understanding of Cloud technologies.
• Excellent written, oral and
presentation skills.
• Ability to work in a Team
and as an individual.
• Ability to work on multiple
Projects at the same time.
• Full Driver’s License
& own mode of transport.
This is a full-time position with an
initial 6-month trial period. Salary
will be based on experience.
Closing Date for applications
is 21st of March 2014.
This position is based out of our
Head Office in Cork City.
References are required.
Please Send or Email Cover Letter and CV to Janette Murphy
HR Department, FDC House, Wellington Road, Cork Email: [email protected]
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FDC GROUP
Head Office:
FDC House, Wellington Road, Cork.
Tel: 021-4509022
Email: [email protected]
www.fdc.ie
Cork
Kerry
Waterford
4/5/6 Patrick’s Quay,
Bandon, Co. Cork.
Tel: 023-8841744
Email: [email protected]
26 Church Street,
Listowel, Co. Kerry.
Tel: 068-24740
Email: [email protected]
23/35 Lower Main Street,
Dungarvan, Co. Waterford.
Tel: 058-41893
Email: [email protected]
9 North Street,
Skibbereen, Co. Cork.
Tel: 028-21818
Email: [email protected]
21 Denny Street,
Tralee, Co. Kerry.
Tel: 066-7193370
Email: [email protected]
4 Church Street,
Dungarvan, Co. Waterford
Tel: 058-45001
Email: [email protected]
Church Road,
Graiguecullen, Co. Carlow.
Tel: 059-9142474
Email: [email protected]
Newtown,
Bantry, Co. Cork.
Tel: 027-52323
Email: [email protected]
Limerick/Clare
4 Main Street,
Lismore, Co. Waterford.
Tel: 058-72800
Email: [email protected]
The Square,
Tullow, Co. Carlow.
Tel: 059-9151685
Email: [email protected]
130 Bank Place,
Mallow, Co. Cork.
Tel: 022 22724
Email: [email protected]
Percival Street,
Kanturk, Co. Cork.
Tel: 029-50292
Email: [email protected]
75 McCurtain Street,
Fermoy, Co. Cork.
Tel: 025-51888
Email: [email protected]
Main Street,
Millstreet, Co. Cork.
Tel: 029-71082
Email: [email protected]
Kilrock House,
Midleton,
Co. Cork
Tel: 021-4633772
Email: [email protected]
www.fdc.ie
St. Ita’s Road,
Newcastlewest, Co. Limerick.
Tel: 069-62688
Email: [email protected]
75 O’Connell Street,
Limerick.
Tel: 061-404644
Email: [email protected]
2nd Floor,
108 The Quay, Waterford.
Tel: 051-872327
Email: [email protected]
Tipperary
Lord Edward Street,
Kilmallock, Co. Limerick.
Tel: 063-98588
Email: [email protected]
Church Street,
Cahir, Co. Tipperary.
Tel: 052-7441266
Email: [email protected]
Church Street,
Abbeyfeale, Co. Limerick.
Tel: 068-30416
Email: [email protected]
Ballyhall,
Roscrea, Co. Tipperary.
Tel: 0505-21944
Email: [email protected]
Corgigg,
Foynes, Co. Limerick.
Tel: 069-65326
Email: [email protected]
Lower Gate Street,
Cashel, Co. Tipperary.
Tel: 062-61947
Email: [email protected]
8 Carmody St Business Park,
Ennis, Co. Clare.
Tel: 065-6828992
Email: [email protected]
Piltown Road,
Carrick-on-Suir, Co. Tipperary.
Tel: 051-640799
Email: [email protected]
5 Castle Street,
Carrick-on-Suir, Co. Tipperary
Tel: 051-640074
Email: [email protected]
Carlow
Wexford
Woodbine Business Park,
New Ross, Co. Wexford.
Tel: 051-421115
Email: [email protected]