Boards Beef Discussion Group

BeeDI

reilig wrote: »

Profit Monitor it is so.
Its a compulsory measure in the Discussion Group. It has to be done in year 1 or 2.

Who has done one?

Not a Teagasc client, so don't have access:(
Would like to do one, so must look into where I could get my hands on the input data sheet on excel!!
I just downloaded a PDF file from dinternet, so if needs be, I will try to put it on excel, and have a go at doing one for myself.
Anyone out there got excel version?

B

jerdee

i m not a teagasc client either part-timer

whats involved/results/baseline

await more ideas /replies

Tipp Man

Will people be posting there profit monitor numbers on here?

In light of the farm income thread it would be interesting to see these

poor farmer

I have completed a profit moniter for milkers for the past few years.
Its definately worth while.If you dont know your own costs your in the dark.
If you complete it once ,you will keep doing it because you will be looking to see improvements I.E more output less costs.

1chippy

Started one recently. Have to start bacckfilling info for the previous months. Its definately a neccessity as al ot of farmers disillusion themselves by thinking the good prices mean good profits. It has really started to open my eyes anyway into where money gets blown. Its not always the big expenses that shock you but more-so the accumulation of the little ones.

reilig

Tipp Man wrote: »

Will people be posting there profit monitor numbers on here?

In light of the farm income thread it would be interesting to see these

Profit Monitor will give different results than farm profit figure from accountant.

An honest opinion from me is that a huge proportion of suckler farmers are part-time with an off farm job. Profit, in these instances, on the farm is kept to a minimum in order to avoid paying tax. This is done by reinvesting in the farm. Farmers are slowly maintaining and developing the asset of the farm. Its one of the main reasons why a huge proportion of suckler farms are unprofitable (ie. they are not farmed to be profitable because they don't want them to be profitable).

In comparison, a huge proportion of the beef finishers in this country are full-time farmers who's only income is from their farming enterprise. In order to live, they have to make a profit.

There are huge variances in profit across the suckler sector according to recent reports. I think that a lot of these variances fall in line with full and part-time farmers.

Its probably a bit of a Taboo subject. I know a few full-time farmers who are making a descent living from sucklers. I know an awful lot more part-time guys who use up all of their tax credits with their off farm job and who just don't want to make a profit on their land because 50% of it will be taken from them in tax.

Again, its a personal opinion. Does anyone agree with me?

BeeDI

reilig wrote: »

Profit Monitor will give different results than farm profit figure from accountant.

An honest opinion from me is that a huge proportion of suckler farmers are part-time with an off farm job. Profit, in these instances, on the farm is kept to a minimum in order to avoid paying tax. This is done by reinvesting in the farm. Farmers are slowly maintaining and developing the asset of the farm. Its one of the main reasons why a huge proportion of suckler farms are unprofitable (ie. they are not farmed to be profitable because they don't want them to be profitable).

In comparison, a huge proportion of the beef finishers in this country are full-time farmers who's only income is from their farming enterprise. In order to live, they have to make a profit. There are huge variances in profit across the suckler sector according to recent reports. I think that a lot of these variances fall in line with full and part-time farmers.

Its probably a bit of a Taboo subject. I know a few full-time farmers who are making a descent living from sucklers. I know an awful lot more part-time guys who use up all of their tax credits with their off farm job and who just don't want to make a profit on their land because 50% of it will be taken from them in tax.

Again, its a personal opinion. Does anyone agree with me?

Yes. That about sums up a big percentage of the situation for suckler farmers. In particular, if you look at the number of new tractors and other machinery owned by small part time farmers. You know at a glance that the farm income no way in hell justifies the new tractor, BUT, the prospect of showing a profit, which will be taxed at over 50% all in, when all tax credits are already used up, is not nice. Better invest in the farm, upgrade the equipment, gain the capital allowances against tax.
Then as I look at it, IF the day job goes, you are set up on the farm, for little or no future big expenditure. You could batten down the hatches, spend as little as possible on equipment, do most of your own work, and eke out a profit, and a living.

Tipp Man

reilig wrote: »

Profit Monitor will give different results than farm profit figure from accountant.

An honest opinion from me is that a huge proportion of suckler farmers are part-time with an off farm job. Profit, in these instances, on the farm is kept to a minimum in order to avoid paying tax. This is done by reinvesting in the farm. Farmers are slowly maintaining and developing the asset of the farm. Its one of the main reasons why a huge proportion of suckler farms are unprofitable (ie. they are not farmed to be profitable because they don't want them to be profitable).

In comparison, a huge proportion of the beef finishers in this country are full-time farmers who's only income is from their farming enterprise. In order to live, they have to make a profit.

There are huge variances in profit across the suckler sector according to recent reports. I think that a lot of these variances fall in line with full and part-time farmers.

Its probably a bit of a Taboo subject. I know a few full-time farmers who are making a descent living from sucklers. I know an awful lot more part-time guys who use up all of their tax credits with their off farm job and who just don't want to make a profit on their land because 50% of it will be taken from them in tax.

Again, its a personal opinion. Does anyone agree with me?

I agree wholeheartedly with you - and it doesn't make sense for part timers to show huge farm profits and the subsequent huge tax bill that follows

but this goes back to my question in the farm income thread which was are the costs associated with suckler cows over exagerated (over inflated probably a better phrase)?? The answer is probably yes - and the reasons are sound. I have long suspected that the profitability of sucklers is understated but i have yet to get concrete numbers to back this up

But doesn't that bring us back to question the whole part time suckler systems and how these better farms fit into the vast majority of sucklers in this country. If i am part time and have 100 acres and say 40 sucklers and lets say i am running them in what some (Teagasc and IFJ) would say is a very inefficient manner - then why would i want to have say 80 cows on the same hundred acres growing the best grass in a paddock system with loads of fertiliser?? Why would i deliberatly be trying to be a better farmer and make more profit - when from a tax point of view it would be a completly irrational thing to do??

axel7

How can people argue that it's better to make a loss so you'll be paying less tax. It just defies logic. For example, if a farm makes a profit of 10,000 and is taxed at 50% you're still going to have the remaining 5,000. Compared this to making a loss of 1,000. I know which I'd prefer. Farmers really need to get to grips with this, it's been happening for decades and there's no talking to those you engage in it, I know from at home and local farmers around me. To me there's only one thing worse than paying tax, and that is not paying tax at all- i.e. not making a cent for your year's hard work. I know people are going to bring up the argument about being able to reinvest in the farm (new tractors, sheds etc.) so it'll be set up to farm, like someone has pointed out (if they lose their off-farm income). But this is a crazy way of running any business. When it's all said and done you'll probably break-even after all the loss-making year are taking into account. You're probably better off being up to your neck in debt to get the new tractor and sheds, at least you know where you stand.

reilig

Tipp Man wrote: »

I agree wholeheartedly with you - and it doesn't make sense for part timers to show huge farm profits and the subsequent huge tax bill that follows

but this goes back to my question in the farm income thread ...


Why would i deliberatly be trying to be a better farmer and make more profit - when from a tax point of view it would be a completly irrational thing to do??

That's my point. The farm income thread was posted by a poster who was questioning if it would be possible to work full - time on his farm and have enough money to survive. Most posters to the thread said that it would not be possible - almost to the point that 100 acres wouldn't support you wothout an off farm job. So for the OP on the Farm income thread, its rational to make more profit, but for those who use up all of their tax credits on an off farm , it makes more sense to invest in their farm (to build an asset for a rainy day) and make no profit, or even make a loss every now and then so that they can recoup some of the tax that they paid in their off farm job.

BeeDI

axel7 wrote: »

How can people argue that it's better to make a loss so you'll be paying less tax. It just defies logic. For example, if a farm makes a profit of 10,000 and is taxed at 50% you're still going to have the remaining 5,000. Compared this to making a loss of 1,000. I know which I'd prefer. Farmers really need to get to grips with this, it's been happening for decades and there's no talking to those you engage in it, I know from at home and local farmers around me. To me there's only one thing worse than paying tax, and that is not paying tax at all- i.e. not making a cent for your year's hard work. I know people are going to bring up the argument about being able to reinvest in the farm (new tractors, sheds etc.) so it'll be set up to farm, like someone has pointed out (if they lose their off-farm income). But this is a crazy way of running any business. When it's all said and done you'll probably break-even after all the loss-making year are taking into account. You're probably better off being up to your neck in debt to get the new tractor and sheds, at least you know where you stand.

Hold on a minute. A part time farmer could make a profit in accounting terms, and for tax return purposes. Lets say he has 30 cows and manages to make an operating profit of €250 per cow. That's total profit of €7500, leaving a tax bill of roughly €3,750.
Now he has a shagged tractor, 25 years old, hard to start on a winters morning, and he needing to get off to the real income providing job.
So spend €x on a tractor such that he can set off the profit or most of it as capital allowances against operating profit.
THAT, makes sense. He could do other things, like building improvements, drainage etc, which also attract capital allowance against income.:cool:

pakalasa

The other thing to consider too is retirement. You could buy say a tractor and have it written off against tax for the last few years before you retire from your day job. It will keep your tax down and then, when you retire, you will have a grand tractor to see you out.;)

darragh_haven

axel7 wrote: »

How can people argue that it's better to make a loss so you'll be paying less tax. It just defies logic. For example, if a farm makes a profit of 10,000 and is taxed at 50% you're still going to have the remaining 5,000. Compared this to making a loss of 1,000. I know which I'd prefer. Farmers really need to get to grips with this, it's been happening for decades and there's no talking to those you engage in it, I know from at home and local farmers around me. To me there's only one thing worse than paying tax, and that is not paying tax at all- i.e. not making a cent for your year's hard work. I know people are going to bring up the argument about being able to reinvest in the farm (new tractors, sheds etc.) so it'll be set up to farm, like someone has pointed out (if they lose their off-farm income). But this is a crazy way of running any business. When it's all said and done you'll probably break-even after all the loss-making year are taking into account. You're probably better off being up to your neck in debt to get the new tractor and sheds, at least you know where you stand.

I dont think any one is sugesting you make a loss (i'm open to correction). It is just spend the majority of the farm income on the farm. Improve yards, roadways, handling facilities etc until such point that you want to go farming full time, or loose an off farm job and have to go farming full time.
EG. if you make 10,000 euro profit on the farm, and are going to be taxed 50% of this (because you OFJ uses all your tax credits), you take home 5,000. So why not improve you farm with €10,000, instead of aking home €5,000 and spending on the farm a couple of years down the line.

Sorry. saw some got there before me.

reilig

axel7 wrote: »

How can people argue that it's better to make a loss so you'll be paying less tax. It just defies logic. For example, if a farm makes a profit of 10,000 and is taxed at 50% you're still going to have the remaining 5,000. Compared this to making a loss of 1,000. I know which I'd prefer. Farmers really need to get to grips with this, it's been happening for decades and there's no talking to those you engage in it, I know from at home and local farmers around me. To me there's only one thing worse than paying tax, and that is not paying tax at all- i.e. not making a cent for your year's hard work. I know people are going to bring up the argument about being able to reinvest in the farm (new tractors, sheds etc.) so it'll be set up to farm, like someone has pointed out (if they lose their off-farm income). But this is a crazy way of running any business. When it's all said and done you'll probably break-even after all the loss-making year are taking into account. You're probably better off being up to your neck in debt to get the new tractor and sheds, at least you know where you stand.

Here's the logic:

Jonny has a suckler farm. He also has an off farm Job where he makes €50k per year. He pays the high rate of tax on over €10,000 of his income (Over 50%). He has no pension, but he hopes to be able to retire at 55 when his mortgage is paid and live off his farm as well as playing a few rounds of golf.
Jonny has a 2 year old tractor, a new farmyard/slatted shed and he is paying off a loan for 1/4 of his land.

With his income and expenditure for the general farm last year, Jonny took in €20,000 and spent €10,000. If Jonny's profit was €10,000, he would have to pay €5000 in tax.

But Jonny has loans for the above investments and these put against his tax means that he makes €5000 of a loss on his farm this year. Therefore, this €5000 can be set against Jonnys off farm income, and it means that he gets a tax refund based on €5000 of his income - he gets approximately €2500 of a refund.

Now, if Jonny had no investments, he would have €5000 in his pocket after tax.

But with the investments, Jonny has €2500 in his pocket, and he has improved his asset quite significantly to ensure that he will have a source of income when he retires. Therefore, because he is spending money on his business, he can do it without having to pay income tax on it.

And i suppose the good thing is that Jonny is managing his own pension. He can decide how it goes. He can pull money from it if he needs it in an emergency. He can build it up and make it make money for him. And possibly the greatest advantage of his type of pension is that he will own it and when he is no longer fit to farm it, he can pass it on to an interested member of his family who will hopefully get the same use out of it as he did.

I hope that makes some sense. I know that it may not be totally 100% accurate, but it gives the general jist of it.

49801

1chippy wrote: »

Started one recently. Have to start bacckfilling info for the previous months. Its definately a neccessity as al ot of farmers disillusion themselves by thinking the good prices mean good profits. It has really started to open my eyes anyway into where money gets blown. Its not always the big expenses that shock you but more-so the accumulation of the little ones.

I'd say 50% of our expenditure a year goes towards R&M (repairs and maintenance). The place is in bad need of money spent on it. There are lots of small things that really rack up and there is also large expenditure items. It'll be a great place when get fed up of it:D:mad:

pakalasa

50% Income tax is just plain crazy. I can never understand the economic logic behind that. All wealth is created through work, so why disincentives people against working. People complain against water charges and the like, but it seems a far better policy to pay directly for state services than pay indirectly through mad income taxes.

Dozer1

From what I see the only full time suckler farmers around me are 60 or older and mostly bachelors aswell so very low expenses, apart from that its all part time lads.

The rest are like myself working full time off the farm with a segmented farm and low enough numbers approx 20 cows.

Therefore like lads said if one of us loose a cow and calf it'll shagg any figures we put in a profit monitor and adds to the idea there's no money in sucklers.

Can anyone post a blank template even?

BeeDI

reilig wrote: »

Here's the logic:

Jonny has a suckler farm. He also has an off farm Job where he makes €50k per year. He pays the high rate of tax on over €10,000 of his income (Over 50%). He has no pension, but he hopes to be able to retire at 55 when his mortgage is paid and live off his farm as well as playing a few rounds of golf.
Jonny has a 2 year old tractor, a new farmyard/slatted shed and he is paying off a loan for 1/4 of his land.

With his income and expenditure for the general farm last year, Jonny took in €20,000 and spent €10,000. If Jonny's profit was €10,000, he would have to pay €5000 in tax.

But Jonny has loans for the above investments and these put against his tax means that he makes €5000 of a loss on his farm this year. Therefore, this €5000 can be set against Jonnys off farm income, and it means that he gets a tax refund based on €5000 of his income - he gets approximately €2500 of a refund.

Now, if Jonny had no investments, he would have €5000 in his pocket after tax.

But with the investments, Jonny has €2500 in his pocket, and he has improved his asset quite significantly to ensure that he will have a source of income when he retires. Therefore, because he is spending money on his business, he can do it without having to pay income tax on it.

And i suppose the good thing is that Jonny is managing his own pension. He can decide how it goes. He can pull money from it if he needs it in an emergency. He can build it up and make it make money for him. And possibly the greatest advantage of his type of pension is that he will own it and when he is no longer fit to farm it, he can pass it on to an interested member of his family who will hopefully get the same use out of it as he did.

I hope that makes some sense. I know that it may not be totally 100% accurate, but it gives the general jist of it.

Jazuz, I hope there aren't too many townies, reading this thread:eek:

JohnBoy

It's no different to anyone with a second self employed job.

Johnny's brother Jack could be interested in woodwork, has a small business making bespoke furniture that he does in his evenings and weekends. spends most of his life filing tax returns and being a responsible citizen, never makes much money doing it, but is building up one hell of a workshop of quality machinery.

Jack turns 55, the kids have all been educated and gone and he gives up the day job to make furniture full time, he has low overheads as he already owns all the kit having built it up over the years.

Jack is able to make a tidy living as he never has to buy a machine tool again.



It's a smaller scale, but equally legitimate example. it's one of the few ways that our tax system does actually reward work and investment.

remember, Johnnie is building up an asset to work, not to sell. if Johnnie tries to sell said asset the tax man will take his slice, one way or another the house always wins!



it's also nothing compared to the tax/investment/pension breaks available to company directors.

KCTK

One thing to watch out for is that Revenue have a rule that farm losses can not be set against other income unless you can show you are farming on a commercial basis, and if you have losses for more than 4 years in a row you cant set off losses against other income until after you return to profit. So have a little plan always in the back of your head (tax planning as we call it!!) to turn a small profit every few years not to get caught by this if you are setting farm losses against PAYE income etc. This article was in the examiner a while back and explaines in more detail. http://www.irishexaminer.com/business/farming/you-cant-offset-hobby-farming-losses-but-171216.html

blue5000

This where we have a massive difference on suckler farms: the full time farmers vs the part time guys. Full time guys are trying to make a living and every euro has to be watched. With part timers the job is subsidising the farm (and larry goodman).

jay gatsby

It's a smaller scale, but equally legitimate example. it's one of the few ways that our tax system does actually reward work and investment.

remember, Johnnie is building up an asset to work, not to sell. if Johnnie tries to sell said asset the tax man will take his slice, one way or another the house always wins!



it's also nothing compared to the tax/investment/pension breaks available to company directors.[/QUOTE]

Johnnie is not being handed thousands of euro in taxpayers money every year through the SFP though!

JohnBoy

the flip side of that is a lot of part time farmers are competing to buy stores/weanlings with full time farmers who's large SFP is subsidising their farm (and larry goodman)



So basically, we're all fighting with each other and larry laughs his way to the bank

JohnBoy

jay gatsby wrote: »

Johnnie is not being handed thousands of euro in taxpayers money every year through the SFP though!

True, but the SFP is 100% eurpean money.

And, a side effect of Johnnies desire to make break even/make a loss is that he spends all that money, introducing cash into the economy.


So, Johnnie can spend his SFP in the wider economy, or he keep it and pay tax on it.

either way, the house wins.

jay gatsby

Just playing Devil's advocate here but European money is Tax payer money really.

Also I would rather get to throw my own money out into the wider economy than hand it to your business and let you do it through SFP.

reilig

Its not Irish tax payers money. Its eu
tax payers money. Up to now we are net receivers as opposed to contributors to the eu tax fund.

Its worth noting that this money is being paid to the Irish farmers to compensate us for selling our food at low cost end ensuring that we have a constant and reliable source of food within Europe.

As i have said 100 times here, i would gladly forfeit my sfp if the food consumers in Europe were willing to pay a price which was greater than the cost of production. Until them I'll accept any subsidy with open arms.

Would ordinary consumers be willing to pay more for unsubsidised food?

jay gatsby wrote: »

It's a smaller scale, but equally legitimate example. it's one of the few ways that our tax system does actually reward work and investment.

remember, Johnnie is building up an asset to work, not to sell. if Johnnie tries to sell said asset the tax man will take his slice, one way or another the house always wins!



it's also nothing compared to the tax/investment/pension breaks available to company directors.

Johnnie is not being handed thousands of euro in taxpayers money every year through the SFP though![/Quote]

jay gatsby

reilig wrote: »

Its not Irish tax payers money. Its eu
tax payers money. Up to now we are net receivers as opposed to contributors to the eu tax fund.

As i have said 100 times here, i would gladly forfeit my sfp if the food consumers in Europe were willing to pay a price which was greater than the cost of production. Until them I'll accept any subsidy with open arms.

Would ordinary consumers be willing to pay more for unsubsidised food?


The fact that we are net receivers does not equal the phrase "it is not our tax money". It's still our taxes going into the fund, we just get a little more reward overall for paying the tax.

My other point in response to the original hypothetical situation is based in cold business terms. Tax money allows the farmer to make a profit, it does not contribute (to the same degree to eg a carpenter). What is being said in this thread is that farmers then take the SFP and rather than pay the income tax it should generate are instead burying it. The fact that most farmers here would like their produce to be worth more on the open market is, in this case at least irrelevant.

i completely accept your points, I'm just saying farming is a bit out of the ordinary for the comparison that was made earlier

Tipp Man

JohnBoy wrote: »

the flip side of that is a lot of part time farmers are competing to buy stores/weanlings with full time farmers who's large SFP is subsidising their farm (and larry goodman)



So basically, we're all fighting with each other and larry laughs his way to the bank

As far as i am aware there was nothing to stop part time farmers building up large SFP's of their own??

some around me do

reilig

jay gatsby wrote: »

reilig wrote: »

i completely accept your points, I'm just saying farming is a bit out of the ordinary for the comparison that was made earlier

But its not. Every business in the country is the same whether its farming, construction, services etc. If money is invested into the business that was not earned in the business, it isn't taxable.

How many businesses in this country get grants?

Certainly a lot more Irish tax payers money goes into grant aid for businesses outside farming than farming - IDA, Local Prtnerships, Leader, Development Agencies etc!!

Tipp Man

So are we going to discuss profit margins on sucklers?

So for me this would be sales less all costs except land, sheds, accountant, hedgecutting and maybe a couple of others