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Partnership in Farming context

  • 13-04-2009 10:51pm
    #1
    A2fan
    Registered Users, Registered Users 2 Posts: 57 ✭✭


    Has anybody any thoughts on setting up a farming enterprise as a partnership between father & son?
    What are the advantages/disadvantages from a taxation/inheritance point of view?
    Any info appreciated
    Thanks in advance:)


Comments

  • #2
    swanvill
    Registered Users, Registered Users 2 Posts: 276 ✭✭swanvill


    Hi A2Fan,

    To be honest I have never heard of it being done, but farmers can be quite secretive, just ask one of them how much land he owns :-) lol .

    The only advantage I can see is that if the Farming Enterprise is non typical farming e.g. cheese making / ice cream making etc. then you can avail of both agricultural relief (on the farming assets land, livestock, machinery etc) & business relief for the business assets (buildings, cheese making machinery in this case) etc. There also maybe positive stamp duty impact as well.

    Creating a unique non typical farming business could be very efficient from a tax point (both income tax & capital acquisitions tax) of view but you would have to be very careful on how it is structured to make sure you can grab the two reliefs!!!


    If you like send me a PM with more detail I night be able to help more.

    Swanvill


  • #3
    viztopia
    Closed Accounts Posts: 770 ✭✭✭viztopia


    There may be a benifit form a tax point of view of setting up a partnership between father and son. Presuming that the profits are split in an even ratio say 50:50 then both partners are taxed on their relevant profits. Now if the father were registered as a sole trader then he would have to employ the son which in turn would mean that he more than likely would have to pay someone to do payroll etc. This would also increase the admin burden and also as farm income can change year on year it would be very hard to pay some one a static wage if the money is not there. it could be better to just split the profits at the end of the year and to live off the drawings in the meantime. A partnership may also be a good option as it will give both partners a good incentive to make the businness more of a success rather than a salaried employee. In terms of taxes on the sale/inheritance of a property/land the factthat you were an employee or a sole trader would make no difference. let me know if you have any further queries.


  • #4
    A2fan
    Registered Users, Registered Users 2 Posts: 57 ✭✭A2fan


    Thanks for the replies thus far....
    I have no specific details other than I have heard of it being done on a dairy/beef farm between the older generation husband & wife and the younger generation of son & daughter in law....and it got me thinking that there must be a good reason for it.....
    Any ideas?


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