Commentary

B5.170 Relief for fluctuating profits in farming and market gardening

Business tax
Business tax | Commentary

B5.170 Relief for fluctuating profits in farming and market gardening

Business tax | Commentary

Averaging

B5.170 Relief for fluctuating profits in farming and market gardening

Farmers can be susceptible to an exceptional incidence of high income taxation created by two special factors. First, that the weather can produce substantial fluctuations in income between one year and another, which under a graduated tax rate system pushes liability into higher rate brackets in one year, without necessarily providing adequate compensation for that in another year. Second, this effect is particularly damaging because farming is a highly capital intensive industry, requiring substantial investment. High taxes discourage investment, and the industry as a whole was suffering.

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