Good article: Substantial tax reliefs available for employing family members

A son or daughter employed full-time on the farm can earn up to €16,500 per annum or €317 per week free of income tax provided that they do not have any other taxable earnings. He/she will not be liable to PRSI if they are residing at home and the parent is operating as a sole trader.

Pretty sure it would be €8,250 before paye kicks in as.

Paye Credit

The tax credit is not due to:

  • Proprietary directors, their spouses or civil partners or children* .
  • The spouse or civil partner or child of a person paying the income.
  • The spouse or civil partner or child of a partner in a partnership.
*Children of proprietary directors are entitled to the PAYE tax credit where:

  • The child’s employment is in a qualifying PRSI contribution class.
  • PAYE has been correctly deducted from the child’s income.
  • The child devotes the whole of their time to the employment.
  • They are paid at least €4,572 per year. This may be apportioned on a time basis.

It seems to be suggested this is a sole trader but if so paye would kick in at €8,250 as paye credit not due. If the parents were Proprietary directors it would be different.
 
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Brendan Burgess said:
Substantial tax reliefs available for employing family members

A very well written article in the Farming Indo by Martin O'Sullivan. I presume it applies to any business, but it's probably easier to make a case that a family member is working on the farm.
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Sorry Brendan, it's simplistic and misleading.

It misses the most crucial point that if a family member's wage is to qualify as an allowable deduction, PAYE must be fully operated on that wage from the outset. This is onerous and it's not just a matter of registering as an employer.

I havent checked this up, but I had understood that income earned by a 14 year old is taxable in their parents' hands.

And I wouldn't fancy having to try to defend this in a revenue audit...
Typically wages to family employees fall far short of what could be justified, so in certain family situations it may be worth the parent's while considering paying a higher wage that could be set aside for some future cost that the son or daughter might incur such as a house, wedding, car and so on, a cost that the parent may have to contribute towards.
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This is very irresponsible reporting, it's an area that Revenue are increasingly tackling.

Unless the trader can establish that the amount paid was wholly and exclusively laid out for the purpose of the trade they cannot have a deduction - or can only have a deduction for the amount that they can establish was wholly and exclusively laid out for the trade.
 
Brendan Burgess said:
it's probably easier to make a case that a family member is working on the farm.
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On the contrary, the increasing focus on health & safety regulation on farms, together with the trend towards mechanisation of farm work, means that it's more difficult than ever to make a case that a child is carrying out anything other than the most basic of tasks of a family farm.
 
T McGibney said:
On the contrary, the increasing focus on health & safety regulation on farms, together with the trend towards mechanisation of farm work, means that it's more difficult than ever to make a case that a child is carrying out anything other than the most basic of tasks of a family farm.
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I assume "Child" here means adult child, have that picture in my head of toddler driving a tractor. Child labor is AFAIK illegal even on family farms, and you would expect an adult (or someone who is aged 16 or over) to be able to carry out many of the tasks on a farm if instructed accordingly, even with machinery and such.
 
An acquaintance of mine is an IT Engineer he is employed as a contractor in a large firm. He has set up a Company through which he manages his tax affairs. He 'employs' his wife as his secretary - she would not know the first thing about what he does; and has not worked herself for 10+ years. They have 4 Children and for each of these she got full statutory maternity benefit; youngest child is now 4 so it was before Maternity benefit became subject to income tax.
Similar type of thing...
 
argentina said:
An acquaintance of mine is an IT Engineer he is employed as a contractor in a large firm. He has set up a Company through which he manages his tax affairs. He 'employs' his wife as his secretary - she would not know the first thing about what he does; and has not worked herself for 10+ years. They have 4 Children and for each of these she got full statutory maternity benefit; youngest child is now 4 so it was before Maternity benefit became subject to income tax.
Similar type of thing...
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The 2014 Revenue Contractors Project vigorously attacked such artificial setups, amid much wailing and gnashing of teeth.
http://mcgibney.ie/?s=contractors+project
 
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