Farm account sample query

Hi There,

I want to do a simple tax return to include a small farm account income.

I'm sure I can produce the farm income account. I am currently paying interest on a small loan which was used to buy this farm. Can I use this as an expense as well as the usual costs, sillage cutting hedge cutting etc. I have bought a couple of animals also, are these an expense also ?

Are there any templates/examples of simple farm accounts which I could reference on the net which could help me sort this issue out.

I am hoping to get some grants as income

Do I need to do a return if there is little or no return in the 1st year ?


Thanks, Schillachie

you'd probably be as well to contact someone like IFAC as there are allowances for farming that can reduce tax bill. Their fee should be fairly small, and you get a discount if you ar are a member of IFA.

Interest on the loan for purchases of the farm business is tax deductible like other expenses. This may be complicated if the loan included the purchase of the farm dwelling. The dwelling would only be allowable to 20% ( as in Tax Relief at Source ) whereas the business element would be allowable at your marginal (highest) rate of tax and also against PRSI and Levies. If theres no dwelling element in the loan its all just allowable agains the business.

Not sure about templates , like the other poster I'd suggest contacting IFAC or a farm accounts advisor who, apart form advising you on the accounts could also give you very good general farm business advice. And their fee is also tax deductible.

The amount of the return from the farm is largely irrelevant in determing ones obligation to file a return. ( there are some exceptions to this but I'll ignore these as you're starting an enterprise and hopefully will be making a taxable profit in due course ). In fact, if you make a loss, that would be allowable against subsequent profits and you need to have returns filed to have that on record with Revenue.

Hope this is some help, but again, get a good farm accounts/tax advisor, they're well worth it.

I prepare my wife's farm accounts. You should treat the purchased animals as 'stock' if you are intending to re-sell them, and then deduct their cost from the sale proceeds when you sell them. There used to be something called 'stock relief' for farmers building up herds; not sure if this applies still. Before paying accountants, start by getting all available frree info from the Revenue commissioners. you can probably do it yourself.

funcrusher said:

There used to be something called 'stock relief' for farmers building up herds; not sure if this applies still. Before paying accountants, start by getting all available frree info from the Revenue commissioners. you can probably do it yourself.

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Stock relief still exists. But with farming, as with any business, it would be advisable to engage professional advice.

Cattle/Sheep Sales xxx
Headage/Subsidies xxx
xxx

Less Expenditure
Cattle/Sheep Purchases
Repairs & Maint
Agri Contractors
Feedstuff
Fertiliser
Accountancy
Bank/Loan Int & Chg
Light & Heat 350
Telephone 350
Veterinary
Sundry ________

Net Profit/Loss



Capital Allowances Computation
Fixed Assets such as tractors, slatted houses(reduced by capital grants received) are allowed at 12.5% per annum

Slatted sheds can be written off at 15% not 12.5%

rate for 2006 is 12.5% on slatted houses

When preparing farm account do you not have to take account of your opening and closing stock at cost i.e. animals that you buy and sell

no revenue are happy with simple income & expenditure account just showing purchases and sales

Non Vat Registered farmers can claim vat back on fixed items i.e gates, gate posts, fencing and blocks or cement purchased, roofs or repairs etc. I do it for my uncle every few years.

NHG said:

repairs etc.

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VAT is NOT reclaimable on repairs.

xxx said:

no revenue are happy with simple income & expenditure account just showing purchases and sales

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Are they happy with this for ALL farmers? I would have thought that only the smallest farmers could get this "exemption"

Joe1234 said:

Are they happy with this for ALL farmers? I would have thought that only the smallest farmers could get this "exemption"

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I have a few farmers who might be dealing in livestock only, and say, have a PAYE job also, or who are on pension and "tipping away" as it were. These, I'd do an Income & Expenditure a/c only for. Otherwise any full-time farmer I'd be doing full P&L & B/Sheet. If applicable stock relief would apply on 25% of increase in stocks unless a "young qualified farmer" wher they get 100% stock relief for a period.

Joe1234

I mean Repairs to roofs, walls etc. If the repair involves something that is fixed it is allowable on a vat claim for non registered farmers.

What form do you use to claim vat back for a non vat registered farmer ? I assume it is reclaimable for Capital expenditure rather than repairs.

Is it a simple process ?

VAT58 - available via google on revenue.ie

NHG said:

Joe1234

I mean Repairs to roofs, walls etc. If the repair involves something that is fixed it is allowable on a vat claim for non registered farmers.

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Not according to the vat 58 form.

[broken link removed]

where it states that "vat is not refundable on repairs to farm buildings or structures".

Graham_07 said:

Otherwise any full-time farmer I'd be doing full P&L & B/Sheet.

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Thats what I would have thought.

Joe1234 said:

Not according to the vat 58 form.

[broken link removed]

where it states that "vat is not refundable on repairs to farm buildings or structures".

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My understanding is for a VAT claim the building has to be new, something not already there or be fixed equipment in a building ( e.g. milking machinery )