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Income tax Averaging

  • 11-09-2010 12:48pm
    #1
    The world over
    Registered Users, Registered Users 2 Posts: 36 ✭


    Hi all, new as a poster but always viewing the different info. I do an income tax return for a farmer and for the past few years I have being operating under the profit averaging system for income tax. This was due to the significant single farm payment being received by farmers. But now with profits at a low level I would like to opt out of this averaging income tax system but I have heard that you have to send something to the revenue to opt out of this system. I will be doing the return on line and I do not see anything on the tax return for the averaging system.


Comments

  • #2
    Alan Shore
    Registered Users, Registered Users 2 Posts: 735 ✭✭✭Alan Shore


    S657 (7) TCA 1997
    (7) Where for a year of assessment an individual is by virtue of subsection (6) chargeable to income tax in respect of profits or gains from farming in accordance with subsection (5) and the individual was so chargeable for each of the 3 years of assessment immediately preceding the year of assessment, he or she may, by notice in writing given to the inspector with the return required under section 951 for the year of assessment, elect to be charged to tax for that year of assessment in accordance with Chapter 3 of Part 4 ; but, where in the case of an individual subsection (6) does not apply for any year of assessment by reason of paragraph (b)(i) of that subsection, the individual shall be deemed to be entitled to elect and to have duly elected, as respects that year of assessment, in accordance with this subsection.
    You could include a note in the accounts panel stating that the tax payer is opting out of averaging.
    Are you aware of the review of the prior years required when opting out.


  • #3
    The world over
    Registered Users, Registered Users 2 Posts: 36 ✭The world over


    Yes I am aware that the revenue review the three previous years but it seems benfical to opt out for the current year in light of previous year results and taking into account the assessable profit and average profit differences for those three years.
    So basically all i do is make a note in the accounts panel of the fact that im opting out of averaging and the revenue will conduct a review themselves?


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