Farm tax

DJ98

What is the story in relation to filing a tax return for a farm when working part time and farming part time. What is required to file the return and is it necessary to pay an accountant to do it? If so what type of fees do they charge?

kk.man

DJ98 wrote: »

What is the story in relation to filing a tax return for a farm when working part time and farming part time. What is required to file the return and is it necessary to pay an accountant to do it? If so what type of fees do they charge?

It's a must because the consequences could be serious. I pay a accountant I think he was 700e this year which is tax deductible. They are up to date on the latest changes to the tax code. You can do it yourself but you better know your stuff.

I value my nights sleep.

krissovo

The tax return can be quite easy for some to file on their own and I did it for a couple of years but now I have a half decent accountant and they more than pay for themselves. Mine manages my personal (PAYE salary) and the farm accounts and I tend do favourably, I certainly pay less tax than I did when I did my own.

I pay anything between €800 > €2000 a year depending on Investments made or support for a grant etc.

DJ98

Is it necessary for farmers to file accounts? Farming sheep on a small scale

kk.man

DJ98 wrote: »

Is it necessary for farmers to file accounts? Farming sheep on a small scale

Not being smart but file them and then you know if you are liable.

davidk1394

For the sake of peace of mind get a registered account to do them. Last thing you'd want to be dealing with is revenue

Bass Reeves

It also important to know that farm losses can be written off against PAYE income for up to three years. If you make a profit you again restart the tax clock. This allows part rime farmers to be build up there business. As well you can register children who work on the farm as employees. Small straight forwards accounts(especially if you have all your receipts in order) should cost no more than 3-350 euro. More complicated accounts cost more. A rental and partnership accounts are costing 800 euro

Cavanjack

Bass Reeves wrote: »

It also important to know that farm losses can be written off against PAYE income for up to three years. If you make a profit you again restart the tax clock. This allows part rime farmers to be build up there business. As well you can register children who work on the farm as employees. Small straight forwards accounts(especially if you have all your receipts in order) should cost no more than 3-350 euro. More complicated accounts cost more. A rental and partnership accounts are costing 800 euro

I’ve never heard of farm accounts being done for €300. Would be a very simple set of accounts for a small operation for that? €700 would be the cheapest I’ve heard of.

Jb1989

Cavanjack wrote: »

I’ve never heard of farm accounts being done for €300. Would be a very simple set of accounts for a small operation for that? €700 would be the cheapest I’ve heard of.

300 sounds small alright. Somewhere around 500 here and I think that's great value

Gudstock

Bass Reeves wrote: »

It also important to know that farm losses can be written off against PAYE income for up to three years. If you make a profit you again restart the tax clock. This allows part rime farmers to be build up there business. As well you can register children who work on the farm as employees. Small straight forwards accounts(especially if you have all your receipts in order) should cost no more than 3-350 euro. More complicated accounts cost more. A rental and partnership accounts are costing 800 euro

Is this loss write off against PAYE true? Do you know if it is published on any documentation?

Bass Reeves

Gudstock wrote: »

Is this loss write off against PAYE true? Do you know if it is published on any documentation?

Yes its not specific to farming. You can use it in any small business. However it used in farming more often than other businesses. Any accountant should be familiar with it. Make sure to allow all farming related expenses such as private car use, electricity and telephone(Inc mobile) as well as capital allowances/deprecation etc

From ICMSA website

https://icmsa.ie/farm-policy/taxation/income-taxes/

It always amazes me the amount of lads that do not know about this. ����

memorystick

A tax clearance cert is a very valuable piece of paper.

Stationmaster

Doing a load of farm accounts here at the moment. Ignoring 'mates rates' and any bit of bartering etc, an average set of farm accounts (nearly all suckler farmers on my books) would be €550 approximately.

curiousinvestor

It always amazes me the amount of lads that do not know about this. ����[/quote]

It really amazes and kinda annoys me the amount of fellas that dont share info or spin complete cock and bull stories. Whether its tax info as ye are discussing here or a good geal somewhere or any little thing that can be of benefit to all. I simply dont get why some spread stupid lies that are easily found out either.

Bass Reeves

curiousinvestor wrote: »

It always amazes me the amount of lads that do not know about this. ����

It really amazes and kinda annoys me the amount of fellas that dont share info or spin complete cock and bull stories. Whether its tax info as ye are discussing here or a good geal somewhere or any little thing that can be of benefit to all. I simply dont get why some spread stupid lies that are easily found out either.[/quote]


The writing off of farm/business losses against other and specifically against PAYE income has been in the tax code 30 odd years. Every farmer should know it. It was one of the reasons I invested in a farm twenty years ago rather than in property. It has been discussed on this forum a couple time a year for as long as I am.pisting here.

On the accounts I said small simple accounts and that the receipt work is completed not thrown in a bundle for the accountant to sort. Lad I worked with that had 12 Suckler cows and had a simple operation very little going through the farm bank account, do really only dose accounts so it will not come back to haunt him is paying. It's works out at 350 euro. He has no profit to show and cannot write off losses at this stage

curiousinvestor

Apologies if I came across wrong n my rant, this forum is fab. I know about the taxes and have had an accountant for 15 years. I was off topic on a personal rant.
Feel free to delete my post. No offence intended

august12

Every year I have the accounts prepared in meticulous order for the Accountant, even have the cheque numbers written on the invoices/receipts, all income/sales totted up, bank charges highlighted etc. Charge is usually 650, I think if I dumped everything into a tin box , fee would be the same.

Dinzee Conlee

august12 wrote: »

Every year I have the accounts prepared in meticulous order for the Accountant, even have the cheque numbers written on the invoices/receipts, all income/sales totted up, bank charges highlighted etc. Charge is usually 650, I think if I dumped everything into a tin box , fee would be the same.

Mine go into the accountant in an excel file, so would be fairly organised as well...
Costs me about 600 - so that seems to be the go of it August...
Having said that - I think it’s money well spent...

august12

Dinzee Conlee wrote: »

Mine go into the accountant in an excel file, so would be fairly organised as well...
Costs me about 600 - so that seems to be the go of it August...
Having said that - I think it’s money well spent...

I used to do the excel as well. Yes, would agree, peace of mind is worth the fee .

kk.man

august12 wrote: »

Every year I have the accounts prepared in meticulous order for the Accountant, even have the cheque numbers written on the invoices/receipts, all income/sales totted up, bank charges highlighted etc. Charge is usually 650, I think if I dumped everything into a tin box , fee would be the same.

I do the same as you and am of the same belief if I handed him the shoe box but it saves queries from him if I spell it all out.

Jb1989

kk.man wrote: »

I do the same as you and am of the same belief if I handed him the shoe box but it saves queries from him if I spell it all out.

Same here too

roosky

Hi all this is the best forum I could find for my question

I have some machinery I want to sell, which are worth approx 30k

They would have been bought through the farm in around 2007/2008 and put in as a farm expense.

If I sell them now do I have to declare the money as income to the farm like will I get taxed on it thanks

20silkcut

roosky wrote: »

Hi all this is the best forum I could find for my question

I have some machinery I want to sell, which are worth approx 30k

They would have been bought through the farm in around 2007/2008 and put in as a farm expense.

If I sell them now do I have to declare the money as income to the farm like will I get taxed on it thanks

Yes it is considered as income.
When they were bought in 2007 that expense would have been put through as capital allowances. And the depreciation would be spread over 8 years. It’s about 12 per cent of purchase price allowed as expense every year until the machine has depreciated to zero.
Now you have sold the machine and realised a value for it that will be considered as farm income.

Best thing to do is re- invest that money in more machinery or farm expenses if you want to avoid being taxed fully on it.
30 k is a sizeable sum for a machine that is so long depreciated through the books.

gozunda

august12 wrote: »

Every year I have the accounts prepared in meticulous order for the Accountant, even have the cheque numbers written on the invoices/receipts, all income/sales totted up, bank charges highlighted etc. Charge is usually 650, I think if I dumped everything into a tin box , fee would be the same.

I have an older neighbour who arrives at the accountant with everything in a binbag. I've no idea what he is charged

Bass Reeves

roosky wrote: »

Hi all this is the best forum I could find for my question

I have some machinery I want to sell, which are worth approx 30k

They would have been bought through the farm in around 2007/2008 and put in as a farm expense.

If I sell them now do I have to declare the money as income to the farm like will I get taxed on it thanks

It is treated as income. If you do not want to reinvest in farming try to spread the sales over a few years. There is an agri relief for older farmers who are over 55 years of age. You can extract 200k for your retirement I know it applies to land sales however I think it can be used in any dale of stick or machinery check with the accountant. You do not be necessarily need to retire. However pension lump sums may have to be accounted for

roosky

20silkcut wrote: »

Yes it is considered as income.
When they were bought in 2007 that expense would have been put through as capital allowances. And the depreciation would be spread over 8 years. It’s about 12 per cent of purchase price allowed as expense every year until the machine has depreciated to zero.
Now you have sold the machine and realised a value for it that will be considered as farm income.

Best thing to do is re- invest that money in more machinery or farm expenses if you want to avoid being taxed fully on it.
30 k is a sizeable sum for a machine that is so long depreciated through the books.

Ya I was thinking that will have to be strategic about it and line up buying something else when I sell, three different machines so that’s how they would still be worth that

K.G.

If you buy a tractor and sell another privately, do you depreciate the difference or so do you take the sale as taxable income and depreciate the full amount of the new tractor

blue5000

K.G. wrote: »

If you buy a tractor and sell another privately, do you depreciate the difference or so do you take the sale as taxable income and depreciate the full amount of the new tractor

Is the old tractor completely depreciated? Then I think any sale value is seen as taxable income. Not 100% sure though, quick phone call to your accountant will answer you properly.

TooOldBoots

I know an awful lot of farmers who have never submitted a tax return. idk how they are getting away with it, they still receive the sfp every year.
It seems to me that revenue are only interested in those that make returns and turn a blind eye to those that don't.
It's a totally unfair situation but one that exists and nothing ever done about it.

20silkcut

TooOldBoots wrote: »

I know an awful lot of farmers who have never submitted a tax return. idk how they are getting away with it, they still receive the sfp every year.
It seems to me that revenue are only interested in those that make returns and turn a blind eye to those that don't.
It's a totally unfair situation but one that exists and nothing ever done about it.

They will be caught eventually.
There was a case a few years ago of a farmer who hadn’t filed a return since 1991. Didn’t end well for him.
They can go back as far as they want. Usually back to when you first received subsidies.
Some people think they can only go back 7 years.
But you are only obliged to keep records for 7 years.
If you don’t have records they look at your farm size and estimate what the average tax a farm of that size should be paying .

Gman1987

blue5000 wrote: »

Is the old tractor completely depreciated? Then I think any sale value is seen as taxable income. Not 100% sure though, quick phone call to your accountant will answer you properly.

I was speaking to the accountant on it last year, you can sell the old tractor and buy the new tractor and depreciate the difference. e.g. Sell old tractor for €20k, buy new tractor for €50k therefore depreciate €30k (€50k-€20k) over the next few years. The only call out is the selling and buying needs to happen in the one tax year.

trg

TooOldBoots wrote: »

I know an awful lot of farmers who have never submitted a tax return. idk how they are getting away with it, they still receive the sfp every year.
It seems to me that revenue are only interested in those that make returns and turn a blind eye to those that don't.
It's a totally unfair situation but one that exists and nothing ever done about it.

That's mad. What constitutes a lot of farmers? How would you even know??

Bass Reeves

20silkcut wrote: »

They will be caught eventually.
There was a case a few years ago of a farmer who hadn’t filed a return since 1991. Didn’t end well for him.
They can go back as far as they want. Usually back to when you first received subsidies.
Some people think they can only go back 7 years.
But you are only obliged to keep records for 7 years.
If you don’t have records they look at your farm size and estimate what the average tax a farm of that size should be paying .

It's a mess when that happens. The onus is on you then to prove your tax liability. Heard a case like this 25+ years ago. Single man had made no tax return ever. When he passed away they accessed his estate and took the 60-80k. This man did not drink, smoke or own a car. He carried his milk in 2-3 churns to the creamery on a horse and cart. He bought a couple loafs of bread every week, a bit of bacon and stewing beef, a half pound of loose tea and a pound of butter. Other than that a bit of salt, pepper and sugar. He grew his own potatoes and vegetables.

Revenue looked at the lodgements to his bank account and accessed them as saving after living costs. They accessed him as needing about 6-10 times what needed to live compared to what he actually lived on. The penalties exceed the actual tax due by a factor of 2-3 times what was due.

They cleaned any money in savings and a bit of the farm he left to a nephew as well.

Bass Reeves

trg wrote: »

That's mad. What constitutes a lot of farmers? How would you even know??

A lot of single farmers may not be making returns. It was only dairy farmers before who lodgement were really visible. But now with nearly all cheques needing to be lodged revenue will have much more visibility. You be surprised haw many may not be making a tax return.

Grueller

I know a man with near 40 pedigree cows, selling bulls in breed society sales for top prices, early forties. At it 15 years, on reports in the journal, breed website, agriland etc. Never, ever made a tax return. I have tried to get him to many times and he shrugs and says he must get around to it some time. His trouble now is that he could have an audit following a return out of nowhere with the turnover he would have annually.

kk.man

Grueller wrote: »

I know a man with near 40 pedigree cows, selling bulls in breed society sales for top prices, early forties. At it 15 years, on reports in the journal, breed website, agriland etc. Never, ever made a tax return. I have tried to get him to many times and he shrugs and says he must get around to it some time. His trouble now is that he could have an audit following a return out of nowhere with the turnover he would have annually.

Awlful predicament but better for him to go to them than the other way.

TooOldBoots

trg wrote: »

That's mad. What constitutes a lot of farmers? How would you even know??

From talking other farmers and also to a Teagasc advisor who told me about the number of lads that could not avail of grants for sheds etc because they didn't do any taxes yet after pleading with them they still wouldn't.

wrangler

kk.man wrote: »

Awlful predicament but better for him to go to them than the other way.

I took over the farm when I was 23 , when I applied for my pension they asked me what I was doing before 23, couldn't believe I was working at home with no income.
I had my own Pig enterprise then, I was sure they'd root that out

20silkcut

Grueller wrote: »

I know a man with near 40 pedigree cows, selling bulls in breed society sales for top prices, early forties. At it 15 years, on reports in the journal, breed website, agriland etc. Never, ever made a tax return. I have tried to get him to many times and he shrugs and says he must get around to it some time. His trouble now is that he could have an audit following a return out of nowhere with the turnover he would have annually.

About a month after I sold cattle in the mart for the first time I got a letter from the revenue looking for a tax return for that year.
Whether the mart sale triggered the letter or not I don’t know.
I’d imagine the revenue could see who’s selling cattle in the mart if they wanted to.

enricoh

Grueller wrote: »

I know a man with near 40 pedigree cows, selling bulls in breed society sales for top prices, early forties. At it 15 years, on reports in the journal, breed website, agriland etc. Never, ever made a tax return. I have tried to get him to many times and he shrugs and says he must get around to it some time. His trouble now is that he could have an audit following a return out of nowhere with the turnover he would have annually.

A lad I know was snared after donkeys years of paying nothing. A meeting was arranged with him, the accountant and the revenue man.
The accountant told him to arrive at the meeting legless drunk and he duly obliged, not an issue for him at the time as he was a half alco back then.

The revenue lad looked at the accountant n nodded a rueful nod. Case closed!

K.G.

Know of a fella that used to work with builders and used to get paid in cash or do deals for labour or materials for the house he built for himself. Time moved on and just as he married and started a family revenue rocked in and asked him where did the house come from.another contrator used to get farmers to make the check payable to machinery dealers and oil companies.in comes revenue one day and asks him to explain where did all the fine gear come from

K.G.

Know of a fella that used to work with builders and used to get paid in cash or do deals for labour or materials for the house he built for himself. Time moved on and just as he married and started a family revenue rocked in and asked him where did the house come from.another contrator used to get farmers to make the check payable to machinery dealers and oil companies.in comes revenue one day and asks him to explain where did all the fine gear come from

Stationmaster

Yea, it's common enough unfortunately. I'm a self employed accountant myself and come across it regularly.
Only the other day my dad asked me could I help out one of the neighbours. He's 72 now and still working fulltime for a big farmer in the area. Has worked all his life as well as farming on the side. Never made one tax return. He hasn't claimed one cent in his state pensions as he 'didn't want to draw attention on himself'. The department stopped paying his small grant last year. The ironic thing is is that if he went to revenue when he was due his pension a few years ago it would easily cover what he owed and he'd be all straightened out by now. There's a lot like him around too.

Bass Reeves

Bass Reeves wrote: »

A lot of single farmers may not be making returns. It was only dairy farmers before who lodgement were really visible. But now with nearly all cheques needing to be lodged revenue will have much more visibility. You be surprised haw many may not be making a tax return.

This is ultimately what tripped up slab murphy in the end......got 18 months in jail for failing to submit tax returns

TooOldBoots

What I can't understand how is it that the Dept of Agriculture keep paying out the Sfp to these folks without a Tax clearance?

lakill Farm

i definitely come across 3 or 4 cases a year where someone has never filed a tax return and another 6/10 cases of not filing a return for more than 2 tax periods. over the last 15 years I say 97.5% of the above cases were agricultural related

Dinzee Conlee

lakill Farm wrote: »

i definitely come across 3 or 4 cases a year where someone has never filed a tax return and another 6/10 cases of not filing a return for more than 2 tax periods. over the last 15 years I say 97.5% of the above cases were agricultural related

Jaysus, where do you start then?

kk.man

lakill Farm wrote: »

i definitely come across 3 or 4 cases a year where someone has never filed a tax return and another 6/10 cases of not filing a return for more than 2 tax periods. over the last 15 years I say 97.5% of the above cases were agricultural related

IMO that when these 'self disclosed settlements.' are made with revenue a good accountant making a good case would get these ppl out of alot of bother.

In many cases these ppl were only making a small income from farming anyway. Revenue could have come after them but they know many are only small fry. Revenue officials get bonuses for defaulters the bigger the default the bigger the prize.

lakill Farm

Dinzee Conlee wrote: »

Jaysus, where do you start then?

case by case bases at that stage


A lot easier if the tax payer makes the first move , not revenue lead, however its never to late


Like in Dec 2019 a local lad asked me to help him. 5 years outstanding returns. court case in 4 weeks. 5 x €1,250 fines would be the minimum court fine for failure to lodge income tax returns


Got all done and dusted, spoke to state solicitor , sent them back up evidence 2 days before court case allowing her to verify direct with revenue that the ITSA were indeed genuine. Cut a deal with them and got away with €1,250 fine not €6,250 and the judge went with the deal