The government is currently working through legislation to ensure that farmers whose herds were culled in response to the Mycoplasma eradication programme will not face an undue tax burden. They have indicated that these changes will apply from the 2018 income year as culling began in late 2017.
At this stage, the proposal allows farmers that have culled their breeding livestock (including growing replacements) because of Mycoplasma bovis to spread the additional income derived as a result of the cull of that stock over the following six years provided that they have:
- Used, and continue to use, the national standard cost scheme or the self-assessed cost scheme for their breeding stock; and
- Substantially replaced the culled livestock within 12 months
Whilst the legislation has not yet been passed, farmers affected by the Mycoplasma eradication programme are able to contact IRD where they wish to use these proposed provisions for the 2018 or 2019 years.
IRD have also indicated that using Income Equalisation is an option for those farmers who have had to cull non-breeding livestock (that is, fattening stock) as they do not qualify for the proposed spreading rules.
Please contact your Director or client manager if you have been impacted and think these spreading provisions may be of benefit to you.