Finance Act 2002 - Disposal of Livestock due to Disease Eradication Measures

Section 29 amends Section 668 TCA 1997 in relation to the special tax treatment of profits arising from the disposal of livestock due to disease eradication measures.

Firstly, the section extends to four years the period over which a farmer may spread the profit arising from such a disposal, which arises on or after 21 February 2001. This option, however, will not apply where a permanent discontinuance of the farming trade occurs. The section provides that a farmer is deemed to be entitled to stock relief equal to the profit assessed, provided that s/he re-invests or intends to re-invest, before the end of the 4 year period, not less than the amount of compensation which was received. However, if the compensation is not fully re-invested by the end of the 4 year period, the aggregate stock relief for the 4 years is to be reduced to an amount that bears the same proportion to the aggregate stock relief as the expenditure actually incurred in the 4 year period bears to the compensation received. This reduction is to take place, as far as possible, in the later years.

Finally, the section makes two technical amendments in order to clarify the interaction of this section with the short tax year. The first amendment provides that where an instalment of profit is to be treated as arising in a one year accounting period which ends between 1 January 2002 and 5 April 2002 and which forms the basis period for the tax years 2001 and 2002, then 74 per cent of the instalment is taken as part of the profits of 2001, and 26 per cent of the instalment is taken as part of the profits of 2002. The second amendment provides that the stock relief for the accounting period in question is to be granted in the same proportions. This latter amendment applies as on and from 6 April 2001.