An example - The tax advice to farmers is to pay your children a wage to cover school expenses, etc. As such, the farmer is bringing such costs in as an allowable expense i.e. wage. There was an article in the Farmers Journal on just this topic about 2 weeks ago.
I spoke to a farmer recently who is paying his son, who does absolutely no work on the farm, €20,000 a year.
The son is in his 20s, single, and in a salaried job elsewhere, where I assume he is already paying 40% tax, 5% USC and 4% PRSI.
I can't see the sense in this at all.
If he doesn't have to pay the Employers PRSI, then there would be some justification for it.
Unless his job is paying him way under the minimum wage, the son will be well within the high rate tax bracket once he gets his €20k on top of it.If he is paying the higher rate of income tax and his son is paying the lower rate, then surely there is a 20% tax saving?
Unless he's laundering money, or he's Larry Goodman, he won't have earned anything near €100k in recent years from farming. The farm prices crisis has hit the biggest farmers worst of all.I did wonder about a farmer declaring income over €100,000
If he doesn't have to pay the Employers PRSI, then there would be some justification for it.
No it's the other way round. For a family employment there has to be a compelling justification for it to be considered insurable under PRSI.
The farmer is paying €110.75 so he saves the tax and PRSI on €110.75 - say 55% - so his net cost is : €49.83
The son receives €100 and pays tax, USC and PRSI of say 49% (if his total income is less than €70,000) , so he gets €51.
Of course, if the father is paying 20% tax and the son is paying 40% tax, this scheme is costing them money. This is not such an unlikely scenario.
now you are thinking like a farmer no point in working all of your life so the bearded brethren can squander it all and dance on your grave,Could it be a way of showing the son is an active farmer and so avoid inheritance tax when the father pops his clogs?