Farm Ireland

Wednesday 21 February 2018

Kerry Shares: Farmers who were ‘tax compliant’ won’t get tax bill - Minister

Ciaran Moran

Ciaran Moran

Farmers who were ‘tax compliant and disclosed the value’ of the shares they received will, not be facing any additional income tax, Minister of State, Eoghan Murphy said in the Dail this week.

His comments come in the wake of 400 farmers in County Kerry receiving a letter from the Revenue Commissioners requesting a payment for under-declaration of income based on patronage shares they had received from Kerry Co-op.

The Minister said it is his understanding these shares were received by milk suppliers, as a consequence of and in proportion to, the quantity of milk supplied.

“The shares are, therefore, a payment received by the farmer for their milk supply and form part of the farmer's trading income for the relevant year.

“This is similar to the general tax treatment applying in respect of share-based remuneration for employees other than certain restrictive Revenue-approved share schemes,” he said.

According to the Minister, employees are liable to income tax, USC and PRSI on their share awards for similar reasons, namely, the share award is linked to their work and is, therefore, treated as taxable employment income.

“To apply a different treatment to farmers who receive valuable shares as a result of their ongoing trading relationship with the co-operative would call into question the taxation of all forms of share-based remuneration received by employees or self-employed contractors in other sectors of the economy.”

He added that it must be accepted the patronage shares received by the co-op members are ‘valuable assets’.

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“The shares can be sold for cash, they can be gifted or transferred to a new owner, and they convey voting and dividend rights on the shareholder.

“In many cases, the values received by farmers were considerable. For example, in 2013, the value received by farmers ranged from zero up to €39,330, with the average value received being approximately €4,860,” he said.


The Minister said the receipt of shares to this value would have been disclosed by many farmers to their accountants.

“The letters issued by Revenue this month have in the first instance been inquiries as to whether the values received have been included in their accounts.

“Farmers who were tax compliant and disclosed the value received will, therefore, not be facing any additional income tax.

“It would be inequitable for those farmers who did correctly declare this income if Revenue did not follow up on those who did not,” he said.

The Minister advised farmers who have received the letter from Revenue to discuss it with their agents to ascertain if any additional liabilities are due, and, if so, to make contact with the Revenue Commissioners.

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