TAX

older by the day · 12-10-2022 2:07pm #1

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

893bet · 12-10-2022 2:25pm

https://www.boards.ie/discussion/2058267168/tax

1) Pay salaries to kids/wife/parents etc is the best method as the money stays in the family.

2) Make sure you are claiming all expenses you can get away with, clothes, phones, diesel, electricity, heating, “new laptop” for the farm that a child also uses then claim a percentage of the cost.

Jb1989 · 12-10-2022 2:28pm

@Bass Reeves your needed

Bass Reeves · 12-10-2022 2:55pm

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.

Cavanjack · 12-10-2022 3:10pm

The best way to avoid paying tax is to go finishing cattle.

893bet · 12-10-2022 3:50pm

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.

mahoney_j · 12-10-2022 4:01pm

https://www.boards.ie/discussion/2058267168/tax

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

older by the day · 12-10-2022 4:06pm

https://www.boards.ie/discussion/comment/119735386#Comment_119735386

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.

Bass Reeves · 12-10-2022 4:18pm

https://www.boards.ie/discussion/comment/119735216#Comment_119735216

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

Bass Reeves · 12-10-2022 4:29pm

https://www.boards.ie/discussion/comment/119735386#Comment_119735386

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.

Bass Reeves · 12-10-2022 5:27pm

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.

Pinsnbushings · 12-10-2022 6:51pm

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.

12-10-2022 7:12pm

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

older by the day · 12-10-2022 7:18pm

https://www.boards.ie/discussion/comment/119736089#Comment_119736089

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

Cavanjack · 12-10-2022 7:24pm

https://www.boards.ie/discussion/comment/119735503#Comment_119735503

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.

Pinsnbushings · 12-10-2022 8:05pm

https://www.boards.ie/discussion/comment/119736210#Comment_119736210

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.

Pinsnbushings · 12-10-2022 8:10pm

https://www.boards.ie/discussion/comment/119736260#Comment_119736260

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.

mr.stonewall · 12-10-2022 8:36pm

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.

Bass Reeves · 12-10-2022 9:47pm

https://www.boards.ie/discussion/comment/119736260#Comment_119736260

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

Bass Reeves · 12-10-2022 9:49pm

https://www.boards.ie/discussion/comment/119736695#Comment_119736695

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.

Tonynewholland · 12-10-2022 10:16pm

https://www.boards.ie/discussion/comment/119737088#Comment_119737088

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

Bass Reeves · 12-10-2022 10:21pm

https://www.boards.ie/discussion/comment/119737192#Comment_119737192

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

trg · 12-10-2022 10:49pm

Have stock relief and income averaging been looked at op?

893bet · 13-10-2022 5:22am

https://www.boards.ie/discussion/comment/119737192#Comment_119737192

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

Tonynewholland · 13-10-2022 8:56am

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

ABlur · 13-10-2022 10:02am

https://www.boards.ie/discussion/comment/119737522#Comment_119737522

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.

Bass Reeves · 13-10-2022 1:35pm

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

I heard reference that you could pay them 8k

Tonynewholland · 13-10-2022 2:08pm

https://www.boards.ie/discussion/comment/119739463#Comment_119739463

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

Grueller · 13-10-2022 2:37pm

https://www.boards.ie/discussion/comment/119739648#Comment_119739648

Accountant here says €5000

Bass Reeves · 13-10-2022 5:47pm

https://www.boards.ie/discussion/comment/119739648#Comment_119739648

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

Tonynewholland · 13-10-2022 8:50pm

https://www.boards.ie/discussion/comment/119740546#Comment_119740546

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.

Bass Reeves · 13-10-2022 8:52pm

https://www.boards.ie/discussion/comment/119741397#Comment_119741397

They are the hours and they equate to about 700 hours and 56 hours holiday pay

epfff · 14-10-2022 6:43am

I'm glad I don't work for any of ye.

When ye are so obsessed with how little ye can pay yeer own children I'd hate to see what ye would do to a stranger like me.

My children are reassuringly expensive when they act as consultant's to my business. They are fully tax compliant and if revenue want to audit they will have no problems.

I find they are worth it and if revenue question there bills I will be suggesting they try using them for some consultant work to see how good they are. It's not revenues job or business to tell me how to run/save money in mine. I pay accountants and advisers to do that and would also recommend revenue to use if them looking for new adviser's.

Bass Reeves · 14-10-2022 9:58am

https://www.boards.ie/discussion/comment/119742208#Comment_119742208

It trying to figure the maximum you can pay them but you have to have a reasoning to justify it.

Jb1989 · 14-10-2022 8:19pm

Lads is field gates vat refundable like fenceing materials? Gates are removable item rather than fixed though.

Hard Knocks · 14-10-2022 8:28pm

https://www.boards.ie/discussion/comment/119746118#Comment_119746118

Yes

Jb1989 · 14-10-2022 9:24pm

https://www.boards.ie/discussion/comment/119746171#Comment_119746171

Thank you 😊

Donald Trump · 16-10-2022 9:48am

https://www.boards.ie/discussion/comment/119742208#Comment_119742208

You're probably not going to get away with paying your 14 year old consultant 30k a year though if Revenue gives you an audit....... Posters are not trying to rip off their kids - just asking what they can get away with on paper

epfff · 16-10-2022 10:02am

https://www.boards.ie/discussion/comment/119750859#Comment_119750859

They can question and dispute it but If there is a paper trail there is no law saying you can't.

Now I would expect all pps numbers involved to be under surveillance from revenue for a while after.

Donald Trump · 16-10-2022 10:34am

https://www.boards.ie/discussion/comment/119750902#Comment_119750902

At the end of the day they could potentially get you for fraud. Even with all the paperwork. If they can show that the work was not done.

Bass Reeves · 16-10-2022 10:54am

https://www.boards.ie/discussion/comment/119751016#Comment_119751016

The food sector is worth 15 billion in exports to Ireland. It's not like MNC GDP it money that is washed through the system 3-4 times. Agriculture is taught to generate a 4 times benefit to economies compared to a lot of other activities on average.

The goose that lays the golden egg is the primary producer. There margins are wafer thin and the day the revenue start micromanaging the tax system.on them will see a rush for the door just like LL leaving the rental sector at present.

The reliefs used are used right accross the small and not so small businesses sector. It comes down to what you can realistically justify. When I started doing it 10+ years ago and it got to where there was two on the books we settled on 12k as the max that could be justified between the two

@epfff you have to look at minimum wage rates, hours and max that you can pay. 30 k total between 3 children on a large dairy farm may be possible it would not fly on a 50-80 acre drystock farm

minerleague · 16-10-2022 11:02am

What are peoples opinions on pensions? Someone I played GAA was a salesman for 1 years ago, signed up ( very small amount at start but premiums up by 5% / year) Get statement every year and they give predicted value and what you'll get on reaching retirement. The yearly pension seems very small compared to value, you'd have to live till near 90 just to get back what you put in in premiums. ( know you can take out 25% first )

epfff · 16-10-2022 11:07am

https://www.boards.ie/discussion/comment/119751084#Comment_119751084

Fully agree with last paragraph. As in you have to be making the money to be paying the wages.

But I'm still not getting the obsession with minimum wage rates? I always thought the only cap on wages was in star or semi state business

I think at the minute after about the 8k per head it loses its tax efficiency/the reciever is falling into a different tax bracket.

But once again once you can show where you got your money CAB won't bother you and if you can show you paid it to someone else for a service it becomes the recievers problem.

If it was a crime to over paying for a service or making bad business decisions the jails of the country would be full of farmers.

Bass Reeves · 16-10-2022 11:24am

https://www.boards.ie/discussion/comment/119751134#Comment_119751134

How many teenagers do you know that are getting paid substantially more than the minimum wage.

I had three children that worked all the time they were going through college. Only one of them got paid more than the minimum wage. She worked in a betting office and was a part time junior manager for the last three years of college.

The limit them was 8k( personal tax credit) you could not use there PAYE credit as a sole trader, if you were incorporated you could.

Not sure is it higher now as along with your personal credit you have an earned tax credit.

DBK1 · 16-10-2022 12:20pm

https://www.boards.ie/discussion/comment/119751182#Comment_119751182

There’s numerous young lads around here that put themselves through college when their summer job was harvesting peat in BnM and they bringing home minimum €1k a week and in certain periods of fine weather there was often closer to €2k than €1k going home after the weeks work.

It was around 2003 that BnM started taking on summer workers and that continued until a few years ago when peat production ended.

I had 1 or 2 lads driving for me that went on to BnM, there’s no way a contractor could compete with them wages.

Bass Reeves · 16-10-2022 12:35pm

https://www.boards.ie/discussion/comment/119751317#Comment_119751317

That was an isolated case in one part of the country and only a certain percentage would manage to get in there. It was also seasonal. You could make the same case for lads during the silage season getting 100-150/ day seven days a week. You even have a certain amount of holiday work in tele centers or government departments that pay 12-14/hour.

However 90% of teenagers or young adults working through college get the minimum wage or a bit with it.

There a saying a Irish teacher that taught me said about Irish Grammer '' the exception proves the rule''