6 days ago
ICMSA urges govt to deliver income volatility measure in Budget 2026
The government must develop a "workable and straightforward taxation measure" in Budget 2026 to help farmers manage income volatility, the Irish Creamery Milk Suppliers' Association (ICMSA) has urged.
In its pre-Budget 2026 submission, seen by Agriland, the ICMSA has called for an income volatility measure to combat the "unique income volatility associated with agriculture and assist new entrants".
The association proposes the use of a tool called the 'Climate and Volatility Mitigation Measure (CVMM)', which it it believes should be used as a template for the introduction of a farm income volatility management tool into the Irish income tax code for farmers.
This comes as the recently-published Teagasc National Farm Survey shows "extreme volatility" in dairy and tillage family farm income in recent years being "particularly evident".
"This has been driven by a combination of fluctuating output and input prices and variations in weather patterns from year to year," the Teagasc report said.
In the programme for government, there is a commitment to examining a new farm income volatility taxation measure to safeguard farmers from markets rising and falling.
The ICMSA has said it is critical that this measure is delivered.
"Continued volatility will lead to greater income uncertainty, further undermining the family farm structure and this is an important issue for Irish farming in terms of generational renewal," the association said.
"Volatility increases pressure on farm cash flow from year to year and is resulting in the exit of farmers from the industry.
"Farmers who are new to the sector are also precluded from income averaging for a number of years and a volatility mechanism is essential to their survival if we want to encourage generational renewal."
The income volatility measure would allow a farmer to deposit income into a farm deposit account in the income tax year in which the profits are made, according to the ICMSA's proposal.
"The amount of the deposit is not tax assessable income in that income year but is in a future year if the farmer opts to utilise the deposit for income," the ICMSA explained.
"The CVMM complements other risk management strategies available to farmers, such as income averaging."
The ICMSA said that rules for off-farm income of a person availing of this tax measure and an overall ceiling on the amount that can be deposited each year in the mechanism should be incorporated.
"Off-farm income of a spouse should not hinder access of a farmer to this scheme," the farm organisation said.
"This tax relief measure could be confined to farmers whose sole or principal income is from farming with realistic off-farm income thresholds set."
Funds "could remain in the CVMM account up to a maximum period of five years or be transferred to a pension", the ICMSA said.
"Farmers would be able to place surplus funds in an independent deposit account to support the farm business in the event of a downturn in farm income and/or for investment in the farming enterprise."
The ICMSA has included a number of other proposals in its submission, with many related to tax, farm schemes, social welfare and pensions, and climate and environment.
ICMSA president Denis Drennan said that agriculture currently has "many challenges" facing it, and that Budget 2026 "should be used to further strengthen our industry against the impending changes on the horizon".
Changes to agricultural relief - a Capital Acquisitions Tax (CAT) relief - proposed in Budget 2025 by government were of great concern to farmers when the announcement came last October.
These changes were then postponed, and the ICMSA has said it "recognises the Department of Finance's efforts to regulate the agricultural relief to ensure only genuine farmers benefit from the relief".
"ICMSA is encouraging the government to protect farmers against the unintended consequences caused by these changes whilst also preventing exploitation of the relief," the farm organisation said.
The ICMSA has sought for the rate at which CAT is charged on gifts or inheritances to be reduced from 33% to 25%.
It has also sought for Capital Gains Tax to be decreased from 33% to 20%.
The organisation has called for a decrease in stamp duty on farm purchases from 7.5% to 3% for active farmers in Budget 2026.
The ICMSA has also called for a permanent exemption for farmers from the Residential Zoned Land Tax, except in instances where a farmer purchases land that is zoned at the time of purchase.
The ICMSA is seeking additional items to be added to the Flat-Rate Farmers Refund Order, including: automated calf feeders; parlour auto washers; cluster removers; and additional milk points.
It said that it is essential that no VAT is applied to low emission slurry spreading equipment, and has also called for the use of protected urea to be incorporated into a tax credit system.
The organisation said that the 60% nutrient storage grant under TAMS does not go far enough and should be increased to 70%.
