Tax rates/reliefs/schemes

JohnBoy

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)

JohnBoy

What's the exemption for rental income?

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

JohnBoy

Is the single farm payment tax exempt?

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

fordfocus1

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

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)

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

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?

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

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

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.

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.

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.

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

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

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

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 ?

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.......

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

JohnBoy

Are legal fees for the transfer of land tax deductable?

whelan1

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

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.

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 ?

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

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?

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?

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

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.......

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.

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

jack77

Depending on how much land is involved you could get some or all transferred as a "Gift" especially when its a parent gifting a child, can't remember off hand how much is the exemption, but worth having a quick look on the revenue site

Joe the Plumber

JohnBoy wrote: »

"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?

Not sure about this 4 year idea, think it may be gone.

follow link below, this is the most up to date info.



http://www.grantthornton.ie/MediaandEvents/Stock-relief-is-good-option

KCTK

Joe the Plumber wrote: »

Not sure about this 4 year idea, think it may be gone.

follow link below, this is the most up to date info.



http://www.grantthornton.ie/MediaandEvents/Stock-relief-is-good-option

Still in place but all could change after December budget, but definately still 100% stock relief available for young farmers for first 4 years at the moment...

KCTK

jack77 wrote: »

Depending on how much land is involved you could get some or all transferred as a "Gift" especially when its a parent gifting a child, can't remember off hand how much is the exemption, but worth having a quick look on the revenue site

Hi Guys, if anyone is thinking of getting some land transferred a read of the link below will be a great help. It outlines how you avail of Agricultural Relief on transfers, if you qualify the taxable value of the transfer is reduced by 90%.
http://www.revenue.ie/en/tax/cat/leaflets/cat5.html

Also if you do not qualify for Ag relief there is another relief which is similar called Business Property relief which you should qualify for once it is a working farm that is being transfered.
http://www.revenue.ie/en/tax/cat/leaflets/cat4.html

This link outlines what you need to qualify for stamp duty relief on a transfer
http://www.revenue.ie/en/tax/stamp-duty/certificates/young-trained-farmers.html

Remember also if you do not qualify for the young farmer relief you can avail of "Consanguinity relief" if the transfer is from certain relatives, this reduces your stamp duty amount by half.

Consanguinity relief

This relief applies to transfers of non-residential property to certain relatives, e.g. parent, grandparent, step-parent, child, foster-child, adopted child, brother, sister, half-brother/sister, aunt, uncle, niece, nephew. Duty is charged at half the normal rate. This relief does not apply to leases or transfers of shares. Finance Act 2011 confirmed that consanguinity relief would no longer apply to transfers of residential property with effect from 8 December 2010.


Again hopefully the Budget in December '11 does not change these!!

trg

KCTK wrote: »

Still in place but all could change after December budget, but definately still 100% stock relief available for young farmers for first 4 years at the moment...

Hi, this states that the relief must be claimed in writing. Does this involve accompanying the form 11 with a letter to this effect? No sign of anywhere you can declare it on the form 11 itself

cj maxx

whelan1 wrote: »

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

i was browsing stuff about accounts and read about ''the farmers handbook'' in this thread
what is it and where can i get it?
thanks

Rovi

cjmc wrote: »

i was browsing stuff about accounts and read about ''the farmers handbook'' in this thread
what is it and where can i get it?
thanks

Here you go:
http://www.farmershandbook.ie/default.asp

It's usually published towards the end of the year, as far as I can remember, so the 2013 edition will be out in a couple of months.
Usually available off the shelf in newsagents/bookshops too.

foyle

arrowman wrote: »

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.

Hi All
Can anyone tell me about the leaflet thats attached to the above post..is there something to do with stamp duty changing on Dec 31st this year....maybe I had better get the skids on the parents

FLC

Hi,

We are looking to transfer the family farm home into my name ( to refurbish the house and cohabit with my parents). We are trying to do this under agri relief and to keep use of my Inheritance allowance as low as possible. What is the minimum amount of land that needs to accompany the transfer of the farm home to meet this requirement?


I am an active farmer and have no other property.

Thanks

lakill Farm

FLC wrote: »

Hi,

We are looking to transfer the family farm home into my name ( to refurbish the house and cohabit with my parents). We are trying to do this under agri relief and to keep use of my Inheritance allowance as low as possible. What is the minimum amount of land that needs to accompany the transfer of the farm home to meet this requirement?


I am an active farmer and have no other property.

Thanks

you really need to talk to a tax advisor to discuss this in full

The_Conductor

FLC wrote: »

Hi,

We are looking to transfer the family farm home into my name ( to refurbish the house and cohabit with my parents). We are trying to do this under agri relief and to keep use of my Inheritance allowance as low as possible. What is the minimum amount of land that needs to accompany the transfer of the farm home to meet this requirement?


I am an active farmer and have no other property.

Thanks

Teagasc have succession planners on their staff- who can give you accurate and pertinent advice. Even the Farming and Forestry forum gang here on boards- would have an idea- but you really need professional advice.

rangler1

FLC wrote: »

Hi,

We are looking to transfer the family farm home into my name ( to refurbish the house and cohabit with my parents). We are trying to do this under agri relief and to keep use of my Inheritance allowance as low as possible. What is the minimum amount of land that needs to accompany the transfer of the farm home to meet this requirement?


I am an active farmer and have no other property.

Thanks

Not knowing your circumstances, but is it wise for your parents to transfer their home, like what would their position be if you died.
Possiblybetter if you transferred the same value in land instead if you want a commitment on their part or security for a loan to refurbish the house.

FLC

Thanks for the replies, it is with a tax adviser. In terms of security for parents you can build in "right of residence" for parents, siblings etc into such transfers.

barnaman

Remember Right of residence subject to CAT

http://www.revenue.ie/en/tax/cat/guide/rights-of-residence.html