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Tax rates/reliefs/schemes

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  • 15-02-2010 10:16am
    #1
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭


    I thought it might be useful to have a post on taxation, what reliefs exemptions and rates exist directly pertaining to farming.

    I'd like to see this thread as becoming some sort of a reference, but also a Q&A area.

    Over time if this works out we might get the mods to tidy up some of the Q&A stuff.

    Whenever possible if answering a question, try and back up your answer with references, the revenue and dept of ag websites are a mine of information, but not always easily found.


    When answering a question, please quote the question to avoid confusion.



    (please note, I'm not a tax adviser or practitioner, nor nessecarily is anyone else on here, take everything you read here with a pinch of salt, and check the references backing up any answers)


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    #2
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    What's the exemption for rental income?


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    #3
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    JohnBoy wrote: »
    What's the exemption for rental income?

    People over 40 can claim up to €12,000 tax free rent received for 5 year leases. If the lease is for 7 years or more the relief is up to €15,000

    http://www.revenue.ie/en/tax/it/reliefs/leasing-farm-land.html


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    #4
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    Is the single farm payment tax exempt?


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    #5
    arrowman
    Registered Users Posts: 124 ✭✭arrowman


    JohnBoy wrote: »
    Is the single farm payment tax exempt?
    No the Single Farm Payment is taxable similar to other farming receipts.

    See this revenue briefing document http://www.revenue.ie/en/practitioner/tax-briefing/61/tb01.htm

    Also some good stuff in this about tax implications of trading single payment entitlements


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    #6
    fordfocus1
    Registered Users Posts: 17 ✭fordfocus1


    is there any way you can write off a loss in farming against your PAYE if you are farming part time?


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    #7
    arrowman
    Registered Users Posts: 124 ✭✭arrowman


    fordfocus1 wrote: »
    is there any way you can write off a loss in farming against your PAYE if you are farming part time?
    Yes you can calim relief for a farming loss against other income (including PAYE) provided that the farm is being run with a view to actually achieving a profit. The relief will only be available for 3 consecutive years (4 at a push)


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    #8
    BeeDI
    Closed Accounts Posts: 805 ✭✭✭BeeDI


    arrowman wrote: »
    Yes you can calim relief for a farming loss against other income (including PAYE) provided that the farm is being run with a view to actually achieving a profit. The relief will only be available for 3 consecutive years (4 at a push)

    The trick is to show some losses in 3 out of 4 years. Timing of sales and capital investment is the way achieve this


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    #9
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    When transferring land a young qualifed farmer needs a "letter of equivilance" from Teagasc to qualify for Stamp Duty Relief. Is the letter of equivilance required at the time of submitting the deeds to the land registry, or at year end when tax returns are being made?


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    #10
    agcons
    Registered Users Posts: 176 ✭✭agcons


    JohnBoy wrote: »
    When transferring land a young qualifed farmer needs a "letter of equivilance" from Teagasc to qualify for Stamp Duty Relief. Is the letter of equivilance required at the time of submitting the deeds to the land registry, or at year end when tax returns are being made?
    Dont think I heard of it. What is it?
    Also you dont need to go near teagasc when doing a land transfer, plenty of private consultants out there www.acaireland.ie


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    #11
    whelan1
    Closed Accounts Posts: 11,786 ✭✭✭✭whelan1


    agcons wrote: »
    Dont think I heard of it. What is it?
    Also you dont need to go near teagasc when doing a land transfer, plenty of private consultants out there www.acaireland.ie
    this had been done on another thread , having had the experience yes you do need the advice of your teagacs man , we went to a private consultant who was a total rip off


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    #12
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    agcons wrote: »
    Dont think I heard of it. What is it?
    Also you dont need to go near teagasc when doing a land transfer, plenty of private consultants out there www.acaireland.ie

    In this situation it's the educational side of teagasc, and the letter is required for anyone who's done the 180 hour course and has another degree which combined are equivilant to a higher level of agricultural qualification.


    Not nessecarily equivilant from an educational standpoint, but it is from a taxation perspective.


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    #13
    arrowman
    Registered Users Posts: 124 ✭✭arrowman


    I think you need to submit the letter of equivalence along with your application for the relief - see page 4 of this leaflet outlining the relief.

    Teagasc are the body that certify that your qualification is suitable to qualify for the relief and the Revenue only really recognise a letter of equivalence from Teagasc to that effect. As far as I'm aware there is a small fee (small relative to the amount of the stamp duty you are saving) for issuing the letter. The rest of the paperwork for the transfer can be handled by your solicitor without any involvement from Teagasc or a consultant.

    Also don't forget to sort out the transfer of any single payment entitlements that may be going along with the land. You should talk to your adviser/ consultant about this also.


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    #14
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    Anyway, having spoken to a good few people here's what I've been told, to start with an explanation of the letter of equivilance.
    JohnBoy wrote: »
    When transferring land a young qualifed farmer needs a "letter of equivilance" from Teagasc to qualify for Stamp Duty Relief. Is the letter of equivilance required at the time of submitting the deeds to the land registry, or at year end when tax returns are being made?

    Many government schemes offer extra reliefs or grant levels to "young qualified farmers".

    There are two ways of becoming qualified in the eyes of the department/revenue. The obvious one is to complete a primary qualification in agriculture, like an ag science degree, or one of a list of courses outlined in the end of this leaflet. The other way of becoming qualified is to have a lesser agricultural qualification and a primary qualification in another area, which combine to be equivalent to an ag degree.

    An example of this would be someone who has a business degree and has completed the 180 hour course.

    A letter of equivilance is a letter from Teagasc (educational division, not advisory) to state that the combination of courses is equivalent to the requirement of a young qualified farmer.



    When a farm transfer is taking place there is a stamp duty relief available to young qualified farmers. To avail of this relief you need to submit your qualifications along with the deeds/contracts. You may need a letter of equivalence at this time, the general advice I've gotten is that it's better to submit it anyway.


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    #15
    whelan1
    Closed Accounts Posts: 11,786 ✭✭✭✭whelan1


    we just sent in the green cert/ certificate in farming as far as i can remember , no matter how much you send in they will still write back looking for something , best of luck with it , did you go to your solicitor also to do an agreement between yourself and your parents - i assume this is where you are getting the land - i did and it was a real eye opener as you could be held responsible for all there care in years to come which would be a shocking amount , at least if you have a written agreement you might loose your shirt paying such fees as nursing homes in years to come , dont get me wrong i would pay towards their care but i couldnt believe how much it costs


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    #16
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Guys-

    As this is likely to be a good repository of information- I've stickied the thread.
    Keep the posts factual, and backup your information with references from relevant sources. If quoting Teagasc or DAFF websites- please check that the information is current elsewhere.

    This is not a discussion thread- any such posts will be deleted without warning. That said- by all means post any queries you may have, or answer any queries that may requested.

    Squabbling or arguing of any nature, will not be tolerated. If you disagree with the information that someone posts- refute it factually, and reference your information- do not get personal.

    Regards,

    SMcCarrick


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    #17
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    How does the tax relief on the income levy for expenditure related to the nitrates directive work?

    In round figures.

    Johnny has an income of €50,000, the levy is 2%
    The income levy on this would normally be 50,000*.02= 1000

    Johnny spends €1000 on nitrates compliance.

    How is the income levy now calculated? is it

    (50,000 - 1000) * .02 = 980

    Or is it
    (50,000*.02) - 1000 = 0


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    #18
    fordfocus1
    Registered Users Posts: 17 ✭fordfocus1


    maybe someone could answer this easier than my accountant.
    Can the depreciation of a commercial vehicle (van or suv) be treated the same as a farm machine?

    can i show a loss in my farm accounts for the depreciation of my commercial vehicle... i have a van and a suv ?


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    #19
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    fordfocus1 wrote: »
    maybe someone could answer this easier than my accountant.
    Can the depreciation of a commercial vehicle (van or suv) be treated the same as a farm machine?

    can i show a loss in my farm accounts for the depreciation of my commercial vehicle... i have a van and a suv ?

    A van or a SUV can be depreciated on a flat line basis to its residual net worth if it can be shown to be used solely in the conduction of a 'stated' business. If there is any question of it being used for personal use- not only would a portion of the depreciated cost be disallowed- you would also be liable for the higher VRT and VAT on the initial purchase price.......

    Lots of people who were self employed and used a SUV for tools etc- are finding that they are not allowed to depreciate it against other income these days, unfortunately.......


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    #20
    milkprofit
    Registered Users Posts: 1,168 ✭✭✭milkprofit


    Make sire you get a price from your solicitor on day one write it down always take notes when meeting solisitor
    -advise get an hourley price not apercentage or better still get aprice for the job xx euros if he she does not agree say you will try elswhwer a lot of them doing 00000


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    #21
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    Are legal fees for the transfer of land tax deductable?


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    #22
    whelan1
    Closed Accounts Posts: 11,786 ✭✭✭✭whelan1


    do you have the farmers handbook all relevant answers should be in it we found it invaluable when doing our transfer


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    #23
    arrowman
    Registered Users Posts: 124 ✭✭arrowman


    JohnBoy wrote: »
    Are legal fees for the transfer of land tax deductable?

    JohnBoy,

    I far as I'm aware, expenses relating to land purchase are NOT deductible as a regular expense. They are not regarded as a revenue expense as they are incurred in the purchase of a capital item.
    You will be allowed a deduction for them in the calculation of Capital Gains Tax should you ever dispose of the land in the future.


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    #24
    k mac
    Registered Users Posts: 641 ✭✭✭k mac


    fordfocus1 wrote: »
    is there any way you can write off a loss in farming against your PAYE if you are farming part time?
    For example this is my first year leasing the family farm and as i had a lot of work to do iexpect to make a loss of about 10k , now some of this would be for second hand machinery i have no vat receipt for but i could account for 7k as i am only farming part time do you think would i be entitled to much of a rebate and as off yet i have not seen an accountant or anything would there be a deadline to apply ?


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    #25
    valtra2
    Registered Users Posts: 726 ✭✭✭valtra2


    hi i am going to start leasing the home farm of my parents on a 3 year lease will be maybe working a day or two a week off farm if i can find work, its a 85 acer farm just worndering where i start about it and are they any grants or anythings going to help new young farmers


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    #26
    JohnBoy
    Registered Users Posts: 2,343 ✭✭✭JohnBoy


    "Creative use of stock relief"

    The farmers handbook 2010 has a short section on stock relief which isnt very clear, and one of the paragraphs is titled as above.


    Would anyone care to explain what creative uses can be made of stock relief, especially the 4 years of 100% relief available to qualified young farmers.

    I was told once upon a time that you could basically spend all your income on cattle on new years eve, and sell them again on new years day and avoid paying any tax.


    You could repeat this process each year for 4 years.


    Is there any truth to this? how does stock relief actually work?


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    #27
    studdlymurphy
    Registered Users Posts: 827 ✭✭✭studdlymurphy


    arrowman wrote: »
    Yes you can calim relief for a farming loss against other income (including PAYE) provided that the farm is being run with a view to actually achieving a profit. The relief will only be available for 3 consecutive years (4 at a push)

    How much relief can you claim? I finished 15k down last year with the purchase of a tractor and I pay about 23k in PAYE tax each year how much of the 15k am I likely to be able to get back?


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    #28
    MIKEKC
    Registered Users Posts: 1,140 ✭✭✭MIKEKC


    whelan1 wrote: »
    we just sent in the green cert/ certificate in farming as far as i can remember , no matter how much you send in they will still write back looking for something , best of luck with it , did you go to your solicitor also to do an agreement between yourself and your parents - i assume this is where you are getting the land - i did and it was a real eye opener as you could be held responsible for all there care in years to come which would be a shocking amount , at least if you have a written agreement you might loose your shirt paying such fees as nursing homes in years to come , dont get me wrong i would pay towards their care but i couldnt believe how much it costs
    This is the reason many advisors are telling people not to transfer but lease instead


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    #29
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    MIKEKC wrote: »
    This is the reason many advisors are telling people not to transfer but lease instead

    If you lease instead of paying, and the title for the property remains in your parents name- any fees associated with their care in latter years must be satisfied by their estate on their passing. Its the latest 'scheme' by the government to pay for private nursing homes etc- and for non-farmers etc- the estate would consist of the family home, which would presumably be sold on the death of the second parent........

    The government has a lot of answering to do.......


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    #30
    jpboy
    Closed Accounts Posts: 7 ✭jpboy


    arrowman wrote: »
    Yes you can calim relief for a farming loss against other income (including PAYE) provided that the farm is being run with a view to actually achieving a profit. The relief will only be available for 3 consecutive years (4 at a push)
    Hi there,sorry for the late correspondence but i just saw this thread. When claiming a farming loss against PAYE ,is there some form to be sent to the tax office with my p60 or should i send a copy of the farm accounts? I just took over the farm this year and am not familiar with the process.


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    #31
    Longback
    Registered Users Posts: 16 ✭Longback


    JohnBoy wrote: »
    Are legal fees for the transfer of land tax deductable?
    . Yup they sure are. When calculating capital gains tax , as in a gift . If you are over the threshold and become tax liable then automatically the 1st €3k is exempt in any one year,50% of stamp duty paid is deductible and all legal fees relating to the actual transfer are deductible too


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