Limiting ‘step-out’ facility on income averaging is ‘blunt and crude’ – ICMSA
The chairperson of the Irish Creamery Milk Suppliers’ Association’s (ICSMA) Farm Business Committee, Shane O’Loughlin, is calling on Revenue and the Department of Finance to amend the newly announced “step-out” procedure for income averaging.
The organisation acknowledged that the current government is introducing many innovative measures to keep small and medium enterprises in business, but he noted that certain obvious ‘tweaks’ need to be made to some of those schemes.
The introduction of an additional ‘step-out’ facility for farmers in income averaging is a good idea but the facility will not be taken up by any farmers due to the restrictive nature of the terms involved.
“Farmers have had the option to ‘step-out’ in a bad year previously, and many took this option with the drought in 2018, for instance. For those farmers who now wish to ‘step-out’ again in 2020, they must incur an overall loss for their business in 2020.”
Many farmers will fail to make the criteria to ‘opt-out’
Many farmers may suffer a substantial drop in income but will fail to make the criteria to avail of this opt-out.
The ICMSA is calling on the Department of Finance and the Revenue Commissioners to review this in a bid to ensure that all farmers whose incomes has fallen in 2020 compared to previous years are allowed to ‘opt-out’ for this year again.
It says the stipulation on a simple ‘loss’ is ‘way too blunt and crude’
The ICMSA chairperson said: “The kind of output and input price volatility we’re experiencing is overtaking the principle of income averaging.”
The ICMSA has proposed the introduction of an income volatility management tool called the Farm Management Deposit Scheme (FMDS) which it says should be a ‘priority’ in Budget 2021.