Dec 072011
 

ICMSA Summary of Budget 2012

 

Funding of Farm Schemes

 

  • REPS 4

There is a reduction of €19 million in REPS funding and this will be implemented by imposing a 10% reduction in payment rates in 2012. However, the Department are currently unsure of how these reductions will apply in practice. This will impact on 30,000 REPS farmers.

 

  • Disadvantaged Areas Scheme:

There are no changes to rates or eligible area but funding will be reduced by €30 million in 2012 through the following changes:

  • The minimum stocking density from 0.15lu/ha to 0.30lu/ha. The Department has indicated that your 2011 Stocking Density will be used to determine eligibility in 2012.
  • The minimum retention period has been increased from 3 months to 6 months and will be calculated over 12 months.
  • There will be a reduced rate of aid where applicants hold both Disadvantaged and non-Disadvantaged lands, e.g. farmer with 80ha and 20ha is Disadvantaged then this farmer will get a quarter of the Disadvantaged area  payment in 2012 that he/she got in 2011.
  • Exclusion of horses from the stocking density calculation.
  • There is an exclusion for land more than 80 kilometres from a farmers main holding.

 

  • AEOS

The Minister will consider the re-opening of AEOS in 2012 on a limited scale early in 2012 with the cost of funding the scheme being met in 2013 pending availability of funding.

 

  • Targeted Agricultural Modernisation Schemes

TAMS will be re-opened in 2012 for all schemes – Poultry and Pig Welfare, Dairy Equipment, Sheep Handling, Rainwater Harvesting Schemes and the Bio-Energy Scheme. The Department have not yet provided details of funding available for these schemes.

 

  • Beef Discussion Group

€5 million has been allocated towards the establishment of a Beef Technology Adoption Programme.

 

  • Suckler Cow Welfare Scheme

Payment will continue in 2012 at current rates.

  • Forestry

Funding of €112 million will allow afforestation to continue at roughly 7,000ha per annum as well as providing for building of forest roads. Forestry premia rates will continue at current levels.

 

  • Animal Health Initiatives

Eradication of BVD:

A voluntary BVD eradication programme which will introduce a scheme of assistance towards the disposal of Persistently Infected (P.I.) calves. There would also be a contribution towards the replacement cost of P.I. suckler calves that have been removed from herds. Financial assistance will only apply during the voluntary phase of the scheme and details of the programme will be announced later.

 

Brucellosis:

Brucellosis testing for dairy herds will go from 50% to 20% in 2012.

 

Johnes Disease:

Roll-out of voluntary testing programme for Johnes Disease. This additional test will be offered on a voluntary basis with the herdowner paying a fee for the additional test and agreeing that the test data is transferred to the Irish Cattle Breeding Federation.

 

Taxation Measures

 

  • Capital Gains Tax

The current rate of Capital Gains Tax is being increased to 30%. This increase applies in respect of disposals made after 06 December 2011

Full retirement relief from Capital Gains Tax on intra-family transfers will be maintained for individuals aged 55 to 66. An upper limit of  €3 million on retirement relief for business and farming assets disposed of within the family is introduced where the individual transferring the assets is aged over 66 years. The current unlimited amount will apply for a transitional period of two years for individuals currently aged 66 or who reach that age before 31 December 2013.

On non-family transfers, the current upper limit of €750,000 for individuals aged between 55 and 66 years will be reduced to €500,000. This change will apply from 2014 onwards, thereby allowing older farmers time to plan for transfer.

A new incentive relief from Capital Gains Tax is being introduced for the first seven years of ownership for properties bought 06 December 2011 and the end of 2013, where the property is held for more than seven years. Where such property is held for more than seven years, the gains accrued in that period will not attract Capital Gains Tax.

 

  • Capital Acquisitions Tax

The current rate of 25% is being increased to 30%. This increase applies in respect of disposals made after 06 December 2011.

There is no change to the 90% Agricultural Relief.

The Class A thresholds which apply to gift/inheritances to Son/Daughter are reduced from €332,084 to €250,000. All other thresholds remain the same.

 

  • Stock Relief

There is a new 50% stock relief (100% for certain young trained farmers) being introduced for registered farm partnerships and will run until 31 December 2015 subject to clearance with the European Commission under State Aid rules.

 

  • Stamp Duty

The stamp duty rate on agricultural land is being reduced from 6% to 2%. A half rate of 1% will be applicable to transfers to close relatives until the end of 2014.

 

  • Universal Social Charge

The exemption rate for the Universal Social Charge has been raised from €4,004 to €10,036.

 

  • VAT

The standard rate of VAT will be increased by 2% from 21% to 23% with effect from 01 January 2012.

The VAT rate applied to open farms will be 9% rather than the new standard rate of 23%.

An amendment to the VAT refund order for unregistered farmers on farm construction will allow farmers to claim a refund on wind turbines purchased from 01 January 2012.

 

  • Carbon Tax

Carbon tax is increased from €15 per tonne to €20 per tonne, however, farmers will be allowed a double income tax deduction in respect of the increased costs arising from the change in the carbon tax.

 

  • Household Charge

A household charge of €100 will be introduced in 2012.

 

  • Motor Tax

Motor Tax rates across all categories will increase from 01 January 2012. Agricultural Tractor rate will increase by €7 from €88 to €95.

 

Social Protection

 

  • Farm Assist

Funding for this vital scheme is being reduced by €5.2 million in 2012 through changes to the means test. Assessment of means from self-employment, including farming, is being raised from 70% to 85%. The deductions from income for children are being halved to €127 per year for each of the first two children and €190.50 per year for each subsequent child.

 

Example :       Married Farmer (Spouse not working) with three children on an assessed income of  €17,000

 

2011

2012

Farm Income

17,000

Farm Income

17,000

Less Disregard for children

889

Less Disregard for children

444.50

Less Income Disregard (30%)

5,100

Less Income Disregard (15%)

2,550

Total Income for Assessment

11,011

Total Income for Assessment

14,005.5

 

The Total Farm Assist Payment due for this family would be €20,914.40. Given an assessed income of €11,011 for 2011 this family would receive €9,903.40 (€190.45/week). However, changes to the means assessment will result in this family now receiving €6,908.90 (€132.86/week).

A total reduction in Farm Assist payment in this case of €2,994.50 (€57.59/week)

 

  • Child Benefit

The current rate of child benefit for the third and subsequent child per family is being phased out over a two year period. The monthly rate for child benefit for the first two children is being maintained at €140. The rate for the third child is reduced to €148 and for the fourth and subsequent children to €160 from January 2012.


Education


  • Means Assessment for Higher Education Grants

The means test for student maintenance grants will be amended to take account of the value of certain capital assets as well as income. This is to apply in 2013/14 for new entrants.

 

  • Third Level Fees and Maintenance Grants

Registration fees for Third Level Colleges are to increase by €250 to €2,250 in 2012, and student maintenance grants are to be reduced by 3% next year.