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TAX

  • 12-10-2022 3:07pm
    #1
    Registered Users Posts: 1,165 ✭✭✭older by the day


    I know we talk a lot about cattle, milk and machinery. But do anyone know how to try to reduce a tax bill on a family farm. I know a private pension, and buildings. But are there some tricks (legal of course) that I'm missing. Got a huge shock today, and looking at a worse one this time next year



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Comments

  • Registered Users Posts: 2,157 ✭✭✭Jb1989


    @Bass Reeves your needed



  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    The best way to avoid tax is spend the money but get a receipt. Building up capital allowances. As @893bet posted above. But even things like cat and dog food are tax deductible. I know a lad that had a longish drive into the farm and he tarmac'ed it. It was a justifiable expense. It has added value to his place while making travelling in and out of the farm easier.

    You will never reduce tax to zero and USC will catch you on capital allowances however it's just remembering to do it right.

    Wages to children have to set up right. You can no longer do it at the end of the year. But any child that works on the farm can be paid a wage. You have to set them up on revenue and pay it into there account. If you pay the by cheque they can lodge the cheque when it suits you.

    Slava Ukrainii



  • Registered Users Posts: 8,270 ✭✭✭893bet


    You are not avoiding tax with capital allowances. Capital allowances mean you are spending the money upfront is all.


    Spend 30k today and have 2k write off against tax for 15 years. You still had to spend the 30k.



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  • Registered Users Posts: 10,705 ✭✭✭✭mahoney_j


    I’d be questioning my accountant if you’ve just got a shock re this years tax as you’ve said …incorporating may be an option but not something you rush into

    a good accountant is worth every penny



  • Registered Users Posts: 1,165 ✭✭✭older by the day


    Thanks, but the story is I don't really need to go building. I don't want a new tractor. No interest in machinery. I'm settled on numbers and run a low cost farm/simple one man system. But I got a few pallets of fert for next year. I might get a bale of posts and sprays.



  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    Not on a grass based system accountant was talking to me as well, between the farm house I have rented and another one as well as the farm I have made a profit last year.

    Better half has half my tax credit and half my 20% tax band. I have not accessed my pension at all. I did a bit of part-time subbie work last year all right.

    I have decent capital allowances that shielded more of it otherwise it would have been a lot worse

    Slava Ukrainii



  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    That is the rock you perish on. Capital allowances are the bed rock of tax avoidance. You will never avoid tax with day to day spending.

    You really only pay up front to build them up after that it's maintaining them

    Y1..... 4k spend allowance 500euro

    Y2.......4k spend allowance 1000euro

    Y3......4k spend allowance 1500euro

    Y4.......4k spend allowance 2000euro

    Y5......4k spend allowance 2500euro

    Y6.......4k spend allowance 3000euro

    Y7.......4k spend allowance 3500euro

    Y8........4k spend allowance 4000euro


    Now you can make the case that by year 8 you have 32k spend but only 18 k in allowances but that gap is as big as it gets. Y16 64k spend Allowances used 50k.

    When you retire just like stock allowances you can also take the remaining capital allowances as a tax free sum.

    Slava Ukrainii



  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    Another trick lads miss is having a partnership with the spouse. This allows you to offset pension payments against both incomes. I know technically you can do it if the other half has enough income but sometimes the spouse is not reaching the high tax band in there own job.

    Slava Ukrainii



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  • Registered Users Posts: 656 ✭✭✭Pinsnbushings


    Was looking at a nice bill last year did a year end preliminary with the accountant which cost a couple of hundred but was well worth.not much use finding out 21 tax now when you can do nothing about it.

    Won't be as bad this year I hope as I have done a new shed between this year and last year. I pushed as much of the expense of the shed into December as I could which turned out to be a big help.

    Other things I did that helped, bought most ofthis years plastic for silage last December all the detergents,teat spray,filter socks, small bit of fertiliser, bought a meal bin, fencing posts, few general maintenance things like gate handles, egg insulators, screws, bolts etc that you always need on a farm.

    Have solar panels ordered for the shed this year 100 percent write off in year 1.

    Technically you are supposed to declare fertiliser as stock.





  • Would you get much done in solar for 20 k? Maybe it would be a good way to reduce tax. Say panels and a battery store



  • Registered Users Posts: 1,165 ✭✭✭older by the day


    So we're the panels grant aided, or did they have to be up and running before the end of the tax year. Or could you buy and store them. Thanks for your help. Detergent and teat dips and those things would help



  • Registered Users Posts: 2,413 ✭✭✭Cavanjack


    The problem here is both of us are on the high tax bracket with off farm jobs so you’d wonder what the bulling and taring is for when the tax bill comes.

    Children are not old enough to pay yet. Firing money into a pension alright but between company pension and her pension there will be a big pot but will probably get Crucified with tax when we do retire.



  • Registered Users Posts: 656 ✭✭✭Pinsnbushings


    Your welcome, I haven't got them yet to be honest, hope to have them installed before Christmas anyway, paid a deposit last November believe it or not but I hadn't the shed built yet. I'm approved for a grant on them, they did the paperwork. I'm not sure if they need to be up and running, it may be possible to pay for them up front, but I suppose you'd want to trust the company.

    The capital allowances are written off first year rather than over 7 years like buildings.



  • Registered Users Posts: 656 ✭✭✭Pinsnbushings


    I'm just over the high tax bracket with work too, my income from the farm is my pension as I don't have one with work. You'd wonder too, spending a nice bit on the farm for that reason at least I might realise some gain from that while I'm still relatively young.



  • Registered Users Posts: 1,285 ✭✭✭mr.stonewall


    To the OP if it's becoming an annual issue of a large tax bill on the farming income, the possibility of a Limited company could be considered. Your off farm income is probably able to keep the house running.



  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    When the children get to 14 it will start to help a lot. It will cost 50+k to get them through college you can really channel money into there college funds and away from pension funding.

    On your pension funds you and your wife can take 25% when you decide to access them. Remember that word access.....that not necessarily when you retire. You could semi retire and access one fund.

    If anything should ever happen to either of you the other person get the complete policy tax free so it a sort of life insurance policy as well

    Slava Ukrainii



  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    Remember in a corporate entity the money is no longer yours. You pay 15%tax from now on to leave it in that entity and it has to go through the tax system before you can access it.

    Slava Ukrainii



  • Registered Users Posts: 852 ✭✭✭Tonynewholland


    What they allow for payment to a 14 year old isn't going to do much for your tax bill.



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  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    No but it all helps. The way you eat an elephant is one bite at a time

    Slava Ukrainii



  • Registered Users Posts: 373 ✭✭trg


    Have stock relief and income averaging been looked at op?



  • Registered Users Posts: 8,270 ✭✭✭893bet



    what is the limited for salary to a 14 ye old?



  • Registered Users Posts: 852 ✭✭✭Tonynewholland


    Well it's worded something like light work only during school holidays and they must have 21 days holidays during this period also.



  • Registered Users Posts: 808 ✭✭✭ABlur


    I pay my 14 year old €50 a week to be paid as a lumpsum at year's end. My accountant said that was as much as I could pay. He gave an example of a 16 year old getting €250 a week but he was working as a contractor with his father so no question of number of hours worked.



  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    8 hours during term time and 35 during school terms. Its described as light work.

    I heard reference that you could pay them 8k

    Slava Ukrainii



  • Registered Users Posts: 852 ✭✭✭Tonynewholland


    I think the 8 hours is for a 15 year old. €2500 or €3000 would be the run of it for 14 year old.



  • Registered Users Posts: 4,871 ✭✭✭Grueller




  • Registered Users Posts: 16,907 ✭✭✭✭Bass Reeves


    I cannot seem to get the link to Citizen Advice to paste onto here. So just Google it.

    The law for 14/15 years olds is the same. 8/week, 35 during holidays and 21 days off per year. Taking the 21 days off holiday time and using Easter, Christmas, mid terms and summer holidays you are looking at 700 hours.

    The minimum wage at present for an U18 years old is 7.35/hour. There is nothing to suggest that you have to pay the minimum wage. As well there is precedence to pay premium for weekend work. Even at an average 9 per hour you are still below the minimum wage. However while they are entitled to 21days off you are entitled to pay them holiday pay

    700/52 is 14ish hours/week or 56 hours holiday pay. Holiday pay is more technical than that and a case for a higher number of hours is possible

    That is a total of 752 hours or 6770 euro to adhere to minimum wage law.

    Accountants especially smaller sole trading ones do not want to draw the revenue onto them.

    Just as an aside a diary recording the nu.ber of hours per week would help in the case of any audit.

    Another thing to remember is the minimum wage is increasing substantially every year so keep an eye to reference it

    Slava Ukrainii



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  • Registered Users Posts: 852 ✭✭✭Tonynewholland


    Working time limits

    Children

    Employers cannot employ children under 16 in regular full-time jobs. They can employ children aged 14 and 15 years on light work as follows:


    Children aged 14 or over can do light work during the school holidays where the hours do not exceed 7 in any day or 35 in any week.

    Children over 15 but under 16 can do light work up to 8 hours a week during school term time.



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