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Going Into Partnership With My Father - Advice

  • 16-06-2016 12:55pm
    #1
    TheClubMan
    Registered Users, Registered Users 2 Posts: 269 ✭✭


    Well folks, I'm looking into farming in partnership with my father. I have a good, flexible off farm job but want to farm part-time with the intention of taking over when he retires down the line. I've been researching the technicalities of a formal farm partnership with regards to my name on the herd number, joint bank account, low rate of tax etc. Can anyone who is farming in partnership with their parents tell me how you split the profits? Also I've just completed the green cert so would that make us eligible for 60% grant aid in the new schemes if we were in a formal partnership? Any advice would be much appreciated.


Comments

  • #2
    Timmaay
    Registered Users, Registered Users 2 Posts: 11,396 ✭✭✭✭Timmaay


    TheClubMan wrote: »
    Well folks, I'm looking into farming in partnership with my father. I have a good, flexible off farm job but want to farm part-time with the intention of taking over when he retires down the line. I've been researching the technicalities of a formal farm partnership with regards to my name on the herd number, joint bank account, low rate of tax etc. Can anyone who is farming in partnership with their parents tell me how you split the profits? Also I've just completed the green cert so would that make us eligible for 60â„… grant aid in the new schemes if we were in a formal partnership? Any advice would be much appreciated.

    In my case the profits have been split 50:50 fro day one, and with my dad getting his pension now from a tax point of view it's coming to the stage where going 70:30 etc would make more sense to keep him off the high rate, however my accountant told me we need to be very careful about ad hoc doing this or there could be a tax liability. He did say their are other ways around it, however given the price of milk this year I'd say we won't be anywhere near the high rate ha. But anyway not really helping you much other than go talk to a decent accountant who knows all about farm partnerships!


  • #3
    yewtree
    Registered Users, Registered Users 2 Posts: 811 ✭✭✭yewtree


    TheClubMan wrote: »
    Well folks, I'm looking into farming in partnership with my father. I have a good, flexible off farm job but want to farm part-time with the intention of taking over when he retires down the line. I've been researching the technicalities of a formal farm partnership with regards to my name on the herd number, joint bank account, low rate of tax etc. Can anyone who is farming in partnership with their parents tell me how you split the profits? Also I've just completed the green cert so would that make us eligible for 60% grant aid in the new schemes if we were in a formal partnership? Any advice would be much appreciated.

    Farming at home with my father in partnership, 50:50 spilt at moment, dads not pension age, spilting the profits helps with Tax as we are not in a company. You will get the 60% grant as we are going through Tams application at the moment. I found IFAC very good when we doing the partnetship, we used the template partnership agreement avaiable on teagasc website. I think you have to take a minimum of 20% of the profits for it to recognised as a partnership, this might be a issue for you with an off farm job.


  • #4
    TheClubMan
    Registered Users, Registered Users 2 Posts: 269 ✭✭TheClubMan


    yewtree wrote:
    I think you have to take a minimum of 20% of the profits for it to recognised as a partnership, this might be a issue for you with an off farm job.


    Thanks for your reply. I would be looking for roughly 35% of the profits to begin with. Can the agreement be changed after a few years depending on how things are going? How might my off farm job have an impact on it?


  • #5
    ganmo
    Registered Users, Registered Users 2 Posts: 7,748 ✭✭✭ganmo


    Ifac advised us that we could take a wage which would appear on the books pre profit and manage the year to year differences that way


  • #6
    yewtree
    Registered Users, Registered Users 2 Posts: 811 ✭✭✭yewtree


    TheClubMan wrote: »
    Thanks for your reply. I would be looking for roughly 35% of the profits to begin with. Can the agreement be changed after a few years depending on how things are going? How might my off farm job have an impact on it?

    The agreement can be amended. On the profits all I meant was some lads when they have off farm income don't want to take as much as 20 % of profits as this can push their earnings into high tax bracket. I think there is a limit with off farm income around 40000. It's been a while since we done our one so hope the details are right. Really important to have good accountant to guide you through it


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  • #7
    milkprofit
    Registered Users, Registered Users 2 Posts: 1,168 ✭✭✭milkprofit


    TheClubMan wrote: »
    Thanks for your reply. I would be looking for roughly 35% of the profits to begin with. Can the agreement be changed after a few years depending on how things are going? How might my off farm job have an impact on it?

    Yes u can change the ratio once u do it at the start of the yaer


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