I am a new farmer

I bought land for 35,000euro. just enough for a few cattle
I paid for this land in full without a loan.
am i entitled to annual relief or am i not taxable til the amount is met

how do i claim this on the tax form and what tax form do i have to get to do this.

Also i have been entitled to farmer payments and Area aid.
are these amounts paid to me taxable. Do they come in after cost of sales.

I am ok with the expenses side of things

just a little confused about the other things

Question 2
My husband is self employed. Basic accounts really

If i have an annual loss how long can i calim this off of him. I dont not work outside the home. I have no income. Its his money that pays for whatever i need


I also put up a slatted unit by direct labour,
I did not apply for grants as it worked out dearer. we saved 20,000by doing it bit by bit. This took the summer in2009 to complete. since january 2009. Can i claim back on this or can i claim off my husbands taxable income.

There are a number of issues here so I'll try go through them in turn.

1) The €35,000 you paid for the land is not an expense. That is a capital asset. You do not get a deduction for the €35,000 against your tax. If you ever sold the land, then any amount over €35,000 would be liable to Capital Gains Tax ( subject to agricultural reliefs which may reduce any CGT. ) If you had borrowed to purchase it then the interest on the loan would be allowable as a deduction for tax.

2) The area aid payments are income and must be included with your return. They would be part of overall sales e.g.
Sale of Cattle
Area Aid
Sales of crops
The area aid payments are from government agencies so must be shown in that part of the accounts schedule on the tax return.

3) Assuming that you are jointly assessed for income tax then any loss in one trade, e.g. yours is allowable against other income in the year ( including his trade income ) or can be carried forward to set against future profits from his business. There is a specific entry on the tax return to indicate if you want to set the loss against other income.

4) The slatted unit. That is allowable for tax but not all at once, but 12.5% pa over 8 years. Unless it was through the Scheme for investment in Farmyard Pollution in which case it is allowable at 33.33% over 3 years. The reason for the longer write off is because it is not a straight expense like, feed or ferts but is something which lasts over time. You claim that in the Capital Allowances section of the tax return.

I appreciate that your farm and his business may be small but given the several sources of income and losses it would be well worth engaging the services of a good local accountant to do up the tax return and accounts for you. The costs are allowable against tax and may well save you more than you think.

I hope this clears some of the issues for you.

thank you it makes sense to me now

just one more question

can my expense be claimed against any other income for as long as the farm might be running at a loss.

shiv99 said:

just one more question

can my expense be claimed against any other income for as long as the farm might be running at a loss.

Click to expand...

Yes, as long as the farming is conducted with a "reasonable expectation of a profit" in the future. This is really to discourage people from using losses in so called "hobby farming" which might never be conducted in a commercial manner against their other income.

Hi,

Is there not a time limit that applies for farm loss write/off against other income?

I understood that where farming is main trade then losses may be written off against spouse income indefinately. Or carried forward for future FARM profits only.

Also that where farming is not the main trade that losses can only go against main income for 3 years, otherwise its deemed hobby farming as you indicate.

Stock relief is also worth a mention - i know of more than 1 firm of accountants who have never heard of this and it is a help, doesnt do any harm anyway!

I have never had a situation where Revenue imposed a time limit on the carry forward of losses.

Where the farmer is new and building up stock, the 100% stock relief is relevant as you mentioned. For existing farmers the 25% relief, while not a lot, is still a break for those farmers with taxable profits.

Losses can only be offset against other income for 3 years and 4 years if the farmer can prove that it would have been impossible for the farmer to make a profit until year 5. In an audit situation the farmer would expect to provide expert evidence to this effect. IMHO dont claim loss offset in year 4 unless you are sure of making a profit in year 5. Losses not offset against other income can be carried forward indefinitely to offset against future farm profits. As regards the slatted shed you can claim capital allowances at 15% PA not 12.5. The initial allowance for the slatted unit is 50% with the remainder written off at 33.33%. The initial allowance of 50% is a floating allowance and can be claimed in full or part at any time over the 4 year write off period. For this accelerated rate to apply it would have to be written into a professionally(?) prepared farm nutrient management plan. The qualifying expenditure is all monies spent on the shed for which you can provide receipts. In an audit situation non receipted items would be added back. Before claiming the capital allowances you can also claim vat back on the receipted expenditure incurred on the shed construction. You can also claim vat back on land reclaimation, fencing and other 'permanent' work around the farm (concrete slabs, etc.).