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Three year losses forward rule??

  • 14-08-2013 11:01am
    #1
    patjack
    Registered Users, Registered Users 2 Posts: 313 ✭✭


    Hi all, will quickly get to the point, I farm part-time and work a PAYE job full time. I know my farm has been running at a loss for the 3 past consecutive years. i.e. 2009, 2010, 2011. My 2012 returns haven’t been submitted yet, it looks like I will be facing another loss. Question is this, in previous years I have received a refund of PAYE tax, for 2012 returns would this scenario be the same?
    I am little confused as to the three year losses forward rule.


Comments

  • #2
    viztopia
    Closed Accounts Posts: 770 ✭✭✭viztopia


    patjack wrote: »
    Hi all, will quickly get to the point, I farm part-time and work a PAYE job full time. I know my farm has been running at a loss for the 3 past consecutive years. i.e. 2009, 2010, 2011. My 2012 returns haven’t been submitted yet, it looks like I will be facing another loss. Question is this, in previous years I have received a refund of PAYE tax, for 2012 returns would this scenario be the same?
    I am little confused as to the three year losses forward rule.

    One of the biggest tax reliefs to some one who has paye income in my opinion!!
    Unfortunately if you make a loss in the 4th year you cant offset it and can only carry it forward. However if you were to make a profit in the 4th year you could then make a loss for the following 3 years and offset this against the paye income. However you would have to be careful as you would have to be farming on a commercial basis with a view to the realization of profit and not a hobby farmer.


  • #3
    mollythecat
    Registered Users, Registered Users 2 Posts: 12 ✭mollythecat


    Hi,

    Interested in this also

    I understood that PAYE and self employed income such as farming were treated separately and losses from one category could not be offset against income from the other category. It would be great if this could be clarified as


  • #4
    razor8
    Registered Users, Registered Users 2 Posts: 2,332 ✭✭✭razor8


    susssh


  • #5
    lakill Farm
    Registered Users, Registered Users 2 Posts: 4,735 ✭✭✭lakill Farm


    mollythecat wrote: »
    Hi,

    Interested in this also

    I understood that PAYE and self employed income such as farming were treated separately and losses from one category could not be offset against income from the other category. It would be great if this could be clarified as

    Yes a farming loss / trade loss can be offset against PAYE income.


  • #6
    arctictree
    Registered Users, Registered Users 2 Posts: 4,364 ✭✭✭arctictree


    lakill Farm wrote: »
    Yes a farming loss / trade loss can be offset against PAYE income.

    Are you sure? My accountant told me that my PAYE tax cannot be offset against farm losses as they are in different industries and treated as two separate ventures.


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  • #7
    Mongarra
    Registered Users, Registered Users 2 Posts: 1,119 ✭✭✭Mongarra


    As viztopia and lakill farm both said farm losses can be set against other income, including Schedule E (PAYE) income. The accountant in question is wrong. Of course they are separate types of industry/income but that is catered for in the Taxes Acts. If he needs the section of the legislation it is Section 662, Taxes Consolidation Act 1997.


  • #8
    Farmer Pudsey
    Registered Users, Registered Users 2 Posts: 6,326 ✭✭✭Farmer Pudsey


    arctictree wrote: »
    Are you sure? My accountant told me that my PAYE tax cannot be offset against farm losses as they are in different industries and treated as two separate ventures.

    If you are farming commercially get rid of that accountant.


  • #9
    lakill Farm
    Registered Users, Registered Users 2 Posts: 4,735 ✭✭✭lakill Farm


    Farmer Pudsey wrote: »
    If you are farming commercially get rid of that accountant.

    Drop me a PM for a quote:cool:.


  • #10
    lakill Farm
    Registered Users, Registered Users 2 Posts: 4,735 ✭✭✭lakill Farm


    arctictree wrote: »
    Are you sure? My accountant told me that my PAYE tax cannot be offset against farm losses as they are in different industries and treated as two separate ventures.


    Pretty sure after 10 years of doing tax returns and farm accounts im SURE.

    So you interested in a 50% fee reduction and tax refund.


  • #11
    arctictree
    Registered Users, Registered Users 2 Posts: 4,364 ✭✭✭arctictree


    Farmer Pudsey wrote: »
    If you are farming commercially get rid of that accountant.

    How is 'farming commercially' defined?


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  • #12
    lakill Farm
    Registered Users, Registered Users 2 Posts: 4,735 ✭✭✭lakill Farm


    arctictree wrote: »
    How is 'farming commercially' defined?

    farming to make a profit


  • #13
    JohnBoy
    Registered Users, Registered Users 2 Posts: 2,342 ✭✭✭JohnBoy


    arctictree wrote: »
    Are you sure? My accountant told me that my PAYE tax cannot be offset against farm losses as they are in different industries and treated as two separate ventures.

    any chance you've picked him up wrong?

    as I understand it* you cannot offset farm expenses against your PAYE income, but you can offset farm losses.



    * and I'm no accountant, think I might have gotten a B in junior cert business studies though


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