Dairy Chitchat 4, an udder new thread.

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TBH you have a car and a commercial vehicle on the farm policy depending on the value of your mother's car it may have been hard to justify another.

Id be very cautious of ltd company itvwas all the go last year cus of big profits which may never be seen for years.Your accounts will cost more to do alot.Any money you take out you have to pay income tax.

The tax savings of being in a company last year would cover the extra accounting costs for the next twenty years

There is a recent thread discussing all this you should look up so no point rehashing here but to your specific point... the company pays me a wage up to lower tax bracket limit and after that I have access to a directors loan account from which I can withdraw money tax free. Most people would have built up 500k plus in this account.

Plus when you retire from the company, you can take a massive lump sum (can't remember the exact figure) tax free

TBF his opinions may be different but they is not to say they have no validity. Too many are starting to let accountants and consultants run there businesses.

You would want a substantial medium to long term tax issue to go the company route. @daiymann 5 is correct in his assertion that anything in the company is not your it's a different entity.

@Windsurfer directors loans are basically capital allowances transferred into the company. There is no magic wand about Dal's they do not magically exist unless you put cash you already have or CA's I to the company.

@Injuryprone the 750k exists no matter if it's a company or a sole trader. But I wonder how many will really use it. How many will build up and key a cash reserve there of 750k to withdraw.

The other disadvantage is with inheritance down the line. You could/ will have a situation where you have a farm outside a company and significant assets within the company, cattle, machinery, maybe significant CA's build up again etc that you could have problems splitting amount your children.

Now and again revenue publish data regarding tax and you see maybe the top 100 having paid a couple million each. These are individuals withdrawing money through dividends from companies generally as there is no other way of getting it out

If you leave cash in a company you need it to have an investment return of 10+% per years. A 50k tax bill at the allowing that you pay about 7.1k in tax, PRSI and USC to use up you lower tax rate( this is also presuming you spouse has use there tax credits lower tax band will be an 18k bill+ extra accountancy and filing charges. The saving of 30k is substantial but it predicates that you do not have other drawings

Remember as well as capital allowances do not transfer in so 12.5% has to be paid on them as well. Assuming you had 25kyear (200k)n capital allowances this would add slightly over 3k/ year to the tax bill so in reality a 50 k bill would be halved.

Over paying into a pension is not necessarily a good thing. Again you are taxed on exit. I be paying the high rate of tax on my pension at present if I drew it down. So you could be shifting it from one tax issue to another and it impossible to shield pension income.

That's not bad money

That is some of the greatest advice you could give a young person don’t bother with a pension…good god….

I knowca lad milking 40 cows started a company last year his accounts bil will be higher than his tax this year

I would advise all young people to fund a pension. Time is on your side. However there is no point in over funding a pension and when you are young you need money to buy a house etc.

However thinking that unlimited pension finding through a PRSA solves a tax issue is not entirely correct.

You can take the first 25% tax free to 200k, after that you pay 20% on the next 300k. You would need a fund of 2 million to do that.

You then have 1.5 million left happy days but the drawdown rules are 4%/year before 70 years of age & 5% after.

@,4% you will be drawing , 60k/ year you will be in the high tax bracket after 40 K and that is presuming you have no other income.

@5% on a million it's 50kyear and the OAP will bring you up near the 65k mark.

Funding a pension much beyond a million, in today's terms cause it's own tax problem. Just as an aside the nursing home will get a good chunk of it as well

Has he or his spouse maxed out tax credits through off farm earnings?

Paying his accountant more than his tax bill could very well be a big win..

My pension plan is lease the farm to some greedy dairy farmer whos neefs land be allowed milk cows tax free you could not beat it why would i need to lock money away for 30 years