AGRICULTURAL ECONOMICS. 35 



farmer wishes to obtain a loan from his banker, it is more easily 

 arranged if he can produce a proper statement of account and 

 other advantages ensue. 



The strongest inducement to account keeping may be men- 

 tioned last, i.e., liability for Income Tax Assessment. A farmer 

 may now choose to be taxed on his profits instead of on the 

 double rental, but in this event, he must produce accounts to 

 the authorities. Though the great majority of farmers at present 

 pay Income Tax on the rental basis, an increasing number are 

 finding it necessary to ascertain their profits or losses from 

 year to year, in order to have the information available for Income 

 Tax purposes if necessary. 



The practice of assessing Income Tax on farms according 

 to the rental value has a long and interesting history. Farms 

 were so assessed in the first Income Tax Act as far back as 

 1799, and the same basis has been continued in each subsequent 

 Income Tax year. Scottish farmers enjoyed a preference 

 in the way of a reduced rate of tax until the year 1894, whilst 

 Irish farmers escaped any taxation for about 50 years, and then 

 enjoyed the same privileges as Scotland. 



Farm Profits. 



Although by no means the only object, one of the objects 

 of keeping accounts is to ascertain the result of the year's opera- 

 tions in the way of profit or loss. It is often thought that once 

 the accounts have been made up and a resulting figure shown of 

 profit or loss, that figure is a matter of fact about which there 

 can be no dispute or difference of opinion. This is not so. 

 Profit in most, if not all, cases is much more a matter of estimate 

 and opinion and valuation than a matter of fact. Before accept- 

 ing as correct the amount of profit shown by any account, it 

 is necessary to consider the various steps by which that profit 

 has been arrived at, and the questions of valuation, apportion- 

 ment and principle that have been dealt with in arriving at the 

 profit. 



There are many reasons which account for the difficulty in 

 settling the real figure of profit in a given case, and some of 

 these will be briefly considered. 



The period for which accounts are usually made up 12 months 

 is quite an arbitrary one. We are compelled for various 

 practical reasons to show the results of farm operations at 

 regular yearly intervals. It becomes important for many reasons, 

 amongst which are profit-sharing schemes and assessments 

 for Income Tax, that the profit should be allocated as correctly 

 as possible to its proper year, and many of the difficulties arise 

 through the necessity of doing this. 



Again, some of the profits or expenses^coverjnore than one 



