Hobby tax

bpmurray

I understand from searching this forum that any income from a hobby is taxable, but I'm not clear about all the other aspects. I got a couple of beehives last year as a hobby: the primary reason for getting them was to pollinate the garden which had become very sad looking the past few years. The actual cost of keeping bees is rather high - already this year, I've had to fork out for feeding, frames, foundation, some fencing to protect neighbours, etc - probably the best part of €150. By the end of the summer, I'll have spend at least double that.

I should get honey from this, much of which will go to family & friends, but I'll probably have a little over. If I sell this, there's no chance it'll cover my costs, but I can live with that. Assuming that the income is taxable, can I then write off my costs against the income? If so, can I write off the entire cost against my PAYE income in the case that costs exceed the income?

Note that I'm not actually planning to run a business, but I just may have some incidental possibility of being able to offset some of the costs.

Mr. Incognito

You earn no income of note and its your hobby not profession. Why do you think you would be able to deduct the costs. ?

barneystinson

bpmurray wrote: »

I understand from searching this forum that any income from a hobby is taxable, but I'm not clear about all the other aspects. I got a couple of beehives last year as a hobby: the primary reason for getting them was to pollinate the garden which had become very sad looking the past few years. The actual cost of keeping bees is rather high - already this year, I've had to fork out for feeding, frames, foundation, some fencing to protect neighbours, etc - probably the best part of €150. By the end of the summer, I'll have spend at least double that.

I should get honey from this, much of which will go to family & friends, but I'll probably have a little over. If I sell this, there's no chance it'll cover my costs, but I can live with that. Assuming that the income is taxable, can I then write off my costs against the income? If so, can I write off the entire cost against my PAYE income in the case that costs exceed the income?

Note that I'm not actually planning to run a business, but I just may have some incidental possibility of being able to offset some of the costs.

Well if you're not running a business, you can't make a loss, can you? You've just spent some of your money on a hobby, no different than if your hobby was drinking pints or collecting train sets...

bpmurray

I'm sorry if my questions appear obtuse to the experts here, but I have pretty much zero understanding of what is what in the tax world, in common with probably 99% of the population, so snide responses are not much help.

I'm not running a business, but indulging in a hobby. And if the taxman wants to take a cut of any small amount I might make on that hobby, to me it seems natural that I should be able to offset the cost of creating that income.

This means that I have three questions:

• Is such income taxable? Even if it's as low as €10 - is there a cut-off point?
• If it's taxable, can I claim any or all costs against that income?
• If I can claim costs, can I claim costs in excess of the profits against PAYE income?

Assuming I can't offset costs, would it be worth my while setting up a company on the side? I don't know what's required, but I presume filing accounts and a long form of the tax return would be a minimum, and I have no idea what these would entail or, more importantly in this case, cost: would the cost exceed any tax win?

Any pointers to documentation on this kind of thing would be very much appreciated. There's only one reference to hobbies on the revenue site, and that seems to indicate that a small income from a hobby is not taxable, but there's insufficient information to be able to draw a definite conclusion: see example 5 here.

Mr. Incognito

bpmurray wrote: »

I'm sorry if my questions appear obtuse to the experts here, but I have pretty much zero understanding of what is what in the tax world, in common with probably 99% of the population, so snide responses are not much help.

I'm not running a business, but indulging in a hobby. And if the taxman wants to take a cut of any small amount I might make on that hobby, to me it seems natural that I should be able to offset the cost of creating that income.

This means that I have three questions:

• Is such income taxable? Even if it's as low as €10 - is there a cut-off point?
• If it's taxable, can I claim any or all costs against that income?
• If I can claim costs, can I claim costs in excess of the profits against PAYE income?

Assuming I can't offset costs, would it be worth my while setting up a company on the side? I don't know what's required, but I presume filing accounts and a long form of the tax return would be a minimum, and I have no idea what these would entail or, more importantly in this case, cost: would the cost exceed any tax win?

Any pointers to documentation on this kind of thing would be very much appreciated. There's only one reference to hobbies on the revenue site, and that seems to indicate that a small income from a hobby is not taxable, but there's insufficient information to be able to draw a definite conclusion: see example 5 here.

Apologies if you think that these are snide comments. I mean as a paying customer you are of course entitled to entirely helpful instant responses to all your detailed tax needs.

I mean that's why us professional advisors come here isn't it. To dole out free advice to people that we charge for it in real life.

The answer is if you earn income it's taxable. All income.

If it's not your business you cannot claim expenses. Why. Because people spend money on their hobbies. They cannot claim this back. The test is expenses must be incurred wholly and exclusively for the trade. Your expenses are not. You cannot claim it against PAYE income either. Why? Because it's your hobby, not a business, not a trade. Hobby.

Setting up a company, sure. Set up costs will be 200-300. Annual accounts will be 200-300 a year. You would also become a proprietary director and be obliged to file a Form 11 so throw in another 200-300 for that, oh and you also get to pay Corporation tax at 12.5% on your earnings and then a further hit to income tax once you try and take money out of the company.

If these responses are not detailed enough, try goldenpages.ie and go pay someone for advice.

bpmurray

Mr. Incognito wrote: »

Apologies if you think that these are snide comments. I mean as a paying customer you are of course entitled to entirely helpful instant responses to all your detailed tax needs.

I mean that's why us professional advisors come here isn't it. To dole out free advice to people that we charge for it in real life.

The answer is if you earn income it's taxable. All income.

If it's not your business you cannot claim expenses. Why. Because people spend money on their hobbies. They cannot claim this back. The test is expenses must be incurred wholly and exclusively for the trade. Your expenses are not. You cannot claim it against PAYE income either. Why? Because it's your hobby, not a business, not a trade. Hobby.

Setting up a company, sure. Set up costs will be 200-300. Annual accounts will be 200-300 a year. You would also become a proprietary director and be obliged to file a Form 11 so throw in another 200-300 for that, oh and you also get to pay Corporation tax at 12.5% on your earnings and then a further hit to income tax once you try and take money out of the company.

If these responses are not detailed enough, try goldenpages.ie and go pay someone for advice.

Thank you for the answers - that's exactly what I was trying to determine in the absence of available information.

Apropos my reference to snide responses, that is informed by my own and others behaviour towards those seeking help on boards.ie and other forums in areas where we are expert - this just does not happen to be taxation so I assumed it was OK to ask for help from those who are familiar with this area. The idea is to consider the questioner to be requesting assistance, even when the question appears to be extraordinarily basic and asinine, and provide a clear, accurate and honest answer in response. If you feel that's beyond you, that's fine: you didn't have to respond (although I'm glad you did, despite the vitriol).

OTOH, if it's a subjective forum with the usual opinionated views, then unleashing the dogs may well be appropriate.

dogsears

Mr. Incognito wrote: »

The answer is if you earn income it's taxable. All income.

I would not agree with this. Income from particular, specified, sources is taxable. That covers a lot but it is not all encompassing.

If it's not your business you cannot claim expenses. Why. Because people spend money on their hobbies. They cannot claim this back. The test is expenses must be incurred wholly and exclusively for the trade. Your expenses are not.

Absolutely, but the combination of these 2 quotes might be read as saying the income part is taxable but no expenses can be set against it. Which is not the case. If the income is taxable (e.g. if in fact it does amount to a trade) then the relevant costs are deductible. OP may have some revenue from what he sells, but its more than outstripped by his costs. So he has no net taxable income. And if the income doesn't derive from a trade (or other taxable source) then its not taxable and the costs don't matter.

But it looks like it really is a hobby so quite rightly he can't get any relief for the loss, because the country would be (even more) bankrupt if people got tax relief for hobby losses.

Mr. Incognito

dogsears wrote: »

I would not agree with this. Income from particular, specified, sources is taxable. That covers a lot but it is not all encompassing.

All income IS taxable.

It my be exempted, relieved or written off based on various provisions of legislation but the default position is ALL income is taxable until you claim a relief or exemption from it.

The only caveat to that are people such as non residents that fall outside the charge to tax completely or resident non domiciles who have their own particular treatment depending on the type of income (foreign/ capital etc)

nompere

Mr. Incognito wrote: »

All income IS taxable.

It my be exempted, relieved or written off based on various provisions of legislation but the default position is ALL income is taxable until you claim a relief or exemption from it.

The only caveat to that are people such as non residents that fall outside the charge to tax completely or resident non domiciles who have their own particular treatment depending on the type of income (foreign/ capital etc)

I'm with dogsears here.

As he pointed out, possibly by reference to Irish Income Tax (what those of us a certain age recall as Judge), income has to flow from a source to be taxable. At para 1.303 of Irish Income Tax, the point is well made that the courts have concluded that because there cannot be income in the absence of a source, income which arises in a tax year where there is no underlying source is not subject to tax. (See Bray v Best [1986] STC 96)

This general principle has often been overwritten by statutory rules, but that doesn't change the starting point.

daveyeh

Hobby tax?

Wait til Bono hears about this.

bpmurray

dogsears wrote: »

I would not agree with this. Income from particular, specified, sources is taxable. That covers a lot but it is not all encompassing.



Absolutely, but the combination of these 2 quotes might be read as saying the income part is taxable but no expenses can be set against it. Which is not the case. If the income is taxable (e.g. if in fact it does amount to a trade) then the relevant costs are deductible. OP may have some revenue from what he sells, but its more than outstripped by his costs. So he has no net taxable income. And if the income doesn't derive from a trade (or other taxable source) then its not taxable and the costs don't matter.

But it looks like it really is a hobby so quite rightly he can't get any relief for the loss, because the country would be (even more) bankrupt if people got tax relief for hobby losses.

So does this mean that the situation is either

• The income is considered as being from trading, in which case the costs can be deducted

or

• The income is not from trading and, as such, is not taxable

Or is it more nuanced than that?