income tax

warfie35

after a very poor year in 2009 fiancially,2010 was massive improvement,i'm a dairy farmer who is now looking at a serious income tax bill for '10,in excess of 10k,accountant is telling me only option is to put lump sum into pension,any ideas

whelan1

warfie35 wrote: »

after a very poor year in 2009 fiancially,2010 was massive improvement,i'm a dairy farmer who is now looking at a serious income tax bill for '10,in excess of 10k,accountant is telling me only option is to put lump sum into pension,any ideas

i posted on this only last week... its unreal... at least i am not the only one in the same boat.... have you already got a pension

whelan1

did you put in all money owed at the end of the year, also go through your visa bill in case there is anything on it related to the farm , i found 2k worth of stuff on the visa:eek: jeep tax , tractor parts etc that i hadnt put in. accountant said if i put money in to a pension it would not reduce my tax bill significantly... the usc is a fecker , mine is over 5k. a totla joke as we get nothing out of it

Suckler

Why should you be exempt from paying income tax?

irishh_bob

Suckler wrote: »

Why should you be exempt from paying income tax?

the op didnt say he should be exempt , i presume the op is trying to minimise his tax burden , all business does this

op , did your accountant suggest income averaging , you had a poor 2009 , therefore under income averaging , 2009 would drag down your profit from 2010

whelan1

Suckler wrote: »

Why should you be exempt from paying income tax?

no one said that , the main fact is after a having a very bad year in 2009 and skimping on everything in 2010 its a bit of a shocker to have a massive tax bill for 2010....i assumed i would be getting my prelimonary tax back that i paid last year... that is not the case however

op, do you have any losses from previous poor years i.e 2009 to carry forward for offset against 2010... double check with your acountant, you may also be able to put a suitable family member through for a salary which would reduce your bottom line.

warfie35

whelan1 wrote: »

did you put in all money owed at the end of the year, also go through your visa bill in case there is anything on it related to the farm , i found 2k worth of stuff on the visa:eek: jeep tax , tractor parts etc that i hadnt put in. accountant said if i put money in to a pension it would not reduce my tax bill significantly... the usc is a fecker , mine is over 5k. a totla joke as we get nothing out of it

Ya have a pension,not making much thou, have family mem on wage bill but only so much that they dont end up paying tax, took over farm '09,accountant telling too early for me to look at averaging, av checked all expenses, everythin up to date,going to do 6mths ac's for 2011 to avoid same scenario.

kennyb3

Deleted User wrote: »

op, do you have any losses from previous poor years i.e 2009 to carry forward for offset against 2010... double check with your acountant, you may also be able to put a suitable family member through for a salary which would reduce your bottom line.

+1 if you had a bad year in 2009 surely there is a decent amount of losses to be brought forward against 2010?

sounds like your accountant has the angles covered, if you have taken the farm over i assume you are ayoung farmer.. if you are increasing your stock numbers at present you will be entitled to increased relief on the cost of doing so.. like i said it sounds like most angles are covered so you probably have no choice but face the bill.. most self employed people are only seing the increased costs of the Income Levy & USC around now.. marriage is always a good way to save a few quid tax wise

whelan1

i am already starting improvement works on the farm which should help to lower the tax bill for next year... its just a kick in the teeth to be faced with such a bill when you're not expecting it, i am also setting up a dd to pay x amount /month towards the preliminary tax for next year... the october part of the sfp had better be paid this year:rolleyes:

Tipp Man

We are paying a hell of a lot more tax than the op (three times as much), we'd love to have that kind of a tax bill. When you see how the government then spends wastes it, well it's enough to turn your stomach

whelan1

Tipp Man wrote: »

We are paying a hell of a lot more tax than the op (three times as much), we'd love to have that kind of a tax bill. When you see how the government then spends wastes it, well it's enough to turn your stomach

did you get a surprise too? total bloody joke, i am not trying to not pay tax iykwim , just the amount that is pissing me off....when my nephew is refused a special needs assistant for school , my tax money would pay well over for it:mad:

dissed doc

Tipp Man wrote: »

We are paying a hell of a lot more tax than the op (three times as much), we'd love to have that kind of a tax bill. When you see how the government then spends wastes it, well it's enough to turn your stomach

You pay more tax because you make more money.

Tipp Man

whelan1 wrote: »

did you get a surprise too? total bloody joke, i am not trying to not pay tax iykwim , just the amount that is pissing me off....when my nephew is refused a special needs assistant for school , my tax money would pay well over for it:mad:

Haven't had the 2010 accounts done yet so not looking forward to them, am expecting to be half crippled with the bill though

The USC is the real problem as there are no write off's against it

whelan1

dissed doc wrote: »

You pay more tax because you make more money.

on paper ye , but in real life no

warfie35

Deleted User wrote: »

sounds like your accountant has the angles covered, if you have taken the farm over i assume you are ayoung farmer.. if you are increasing your stock numbers at present you will be entitled to increased relief on the cost of doing so.. like i said it sounds like most angles are covered so you probably have no choice but face the bill.. most self employed people are only seing the increased costs of the Income Levy & USC around now.. marriage is always a good way to save a few quid tax wise

Hey lads thanks for all the replies,wont qualify for stock relief,i turn 37 soon,looks like i'll av to put lump sum into pension to reduce bill some bit,making some farm improvements this year to help keep next years bill down.

whelan1

wonder should the ifa make a repersentation to the government on this issue, i assume us few are not the only people that are going to be affected by this... i can also see alot of people not being able to make the payments

JohnBoy

whelan1 wrote: »

on paper ye , but in real life no

how does that work exactly.

I understand how one can make a loss on paper, but not how you can make a profit.



All the rest of the country has to pay the USC too.

It sucks, comes out of our paypackets every week/month.


Farmers have the most positive tax treatment of any group in this country (except those on the dole)

whelan1

JohnBoy wrote: »

how does that work exactly.

I understand how one can make a loss on paper, but not how you can make a profit.



All the rest of the country has to pay the USC too.

It sucks, comes out of our paypackets every week/month.


Farmers have the most positive tax treatment of any group in this country (except those on the dole)

i am saying during the relevant year i had no money ... i scrimped on everything.... then to be told you have made a massive profit and that you have a massive tax bill , half of which is the usc... i assumed i would be getting my preliminary tax back instead i am paying a hell of a lot more... how much tax do you pay... if we could see the money was going to good use it wouldnt be as bad

JohnBoy

I pay around 15k a year (lets see how long it takes for ye all to figure out my salary) but that's for my job, not the farm. the farm wont make money for a few years yet (if ever) too much money needs to be spent to undo years of tenant neglect.

I can see where all the tax money goes, into a black hole unfortunately.

The fact that you had to scrimp and save has no bearing on your business' profitability though, that's your personal outgoings. dem childer be expensive yokes, I know.


Taxes suck, but everyone should have to pay them

Tipp Man

JohnBoy wrote: »

I pay around 15k a year (lets see how long it takes for ye all to figure out my salary) but that's for my job, not the farm. the farm wont make money for a few years yet (if ever) too much money needs to be spent to undo years of tenant neglect.

I can see where all the tax money goes, into a black hole unfortunately.

The fact that you had to scrimp and save has no bearing on your business' profitability though, that's your personal outgoings. dem childer be expensive yokes, I know.


Taxes suck, but everyone should have to pay them

You cannot compare PAYE with a business tax payer, they are 2 totally different entities with completly different outlooks.

the biggest problem for all business is cash flow which is in no way linked to your profit, yet you pay tax on profit and not cash flow. Essentially this means that you could be showing a profit on paper yet not have the cash in the bank to pay the tax on this "profit". for example we bought a tractor in 2002 for 35k and sold it in 2008 as a trade in, the new tractor was 60k and we got about 28k for the 2002 tractor. However on paper the tractor was only valued at something like 15k so we showed a "profit" on the sale of the tractor of 13k, yet there wasn't 1 cent (cashflow) received from this "profitable" transaction to pay the tax on it (only a 30k loan for the new tractor). The tax on that transaction was about 7k and no money was ever received

For a PAYE it is simple - you never see the money in the first place so you never have a cash flow issue (tax related anyway). Everything you get in your pay cheque is yours to spend as you wish, self employed always has to factor in tax on any income they make

JohnBoy

I know it's a different system, that places different demands on a person, I get that, but it still has to be paid.

And while you saw now cashflow in the year you sold that tractor you had gained tax benefits in the previous years from it.

Cashflow and tax management are part of running a business.


Like I say. it sucks, but we all have to do it.

Tipp Man

JohnBoy wrote: »

I know it's a different system, that places different demands on a person, I get that, but it still has to be paid.

And while you saw now cashflow in the year you sold that tractor you had gained tax benefits in the previous years from it.

Cashflow and tax management are part of running a business.


Like I say. it sucks, but we all have to do it.

I am perfectly aware of the various parts of running a business, I was merely giving an example of how a non cash transaction can give you a large tax bill based on a paper profit

I don't think any farmer has a problem with paying tax, the problem is that we have a public sector that is hugely over paid and hugely underworked which is costing the taxpayer a fortune, so we are paying excessive tax for little to no return. Tax is the worst possible cost to any business as you get zero return for it, most other expenditures for a business leads to some kind of return. Tax just drains business and takes from reinvestment.

Tipp Man

Has anybody here had any advice regarding converting the farm to a company?

there seems to be a lot of talk in the journal and Indo about it recently

whelan1

Tipp Man wrote: »

Has anybody here had any advice regarding converting the farm to a company?

there seems to be a lot of talk in the journal and Indo about it recently

i would be interested in the partnership route, does anyone have experience of this either? how does it work , sorry for hijacking your question tippman:D

Tora Bora

Tipp Man wrote: »

I am perfectly aware of the various parts of running a business, I was merely giving an example of how a non cash transaction can give you a large tax bill based on a paper profit

I don't think any farmer has a problem with paying tax, the problem is that we have a public sector that is hugely over paid and hugely underworked which is costing the taxpayer a fortune, so we are paying excessive tax for little to no return. Tax is the worst possible cost to any business as you get zero return for it, most other expenditures for a business leads to some kind of return. Tax just drains business and takes from reinvestment.

You make a good point in your previous post about this making "profit" which is non cash positive when trading in a machine.
I have seen lads come on here, and say they got advice from their accountant (and in most cases from tractor salesman;)) that it makes sense to buy a tractot for example, and depreciate it on the books, in order to offset it against tax.
Many farmers believe, they can trade in in five years, against a new tractor and keep the depreciation going against their tax bill.
However, like you point out, it's not so simple. Trade after 5 years when you have it 100% written down, and get say €20k for it on the trade in!

Now you are crystalizing a €20k profit, on which you pay tax:P
Good tractor salesmen, don't point that out day one now, do they:D

bob charles

If you make money you pay tax simple as. Not having the money to paid the tax bill is a cash flow problem. I seriously doubt the quality of some accountants as there are many ways to legitimately reduce a tax bill for self employed. If your not happy with the figures your accountant has come up with why not speak to another accountant and see if they can do a better job. There are so many tax deductible things that some accountants dont even know about.

There are a couple of ways of reducing making paper profits on machinery but you better talk to someone in the know. Some people would prefer to spend money foolishly than pay tax. Nothing wrong with paying tax

Username John

Hmmm, tax is one those things of life... everyone should pay it.

There are many threads on here re are you good mechanically, or how good a judge of cattle are you.
Farmers need to be a jack of all trades - surely one of the trades is book-keeping / accounting?
This allows a level of forward planning, to tell you when to invest in machinery, improvements?

Now, I appreciate I dont have a big farm, with lots of expenses, inputs, outputs, so its easy for me to talk when I can track farm money on one page nearly

Box09

Tipp Man wrote: »

I am perfectly aware of the various parts of running a business, I was merely giving an example of how a non cash transaction can give you a large tax bill based on a paper profit

I don't think any farmer has a problem with paying tax, the problem is that we have a public sector that is hugely over paid and hugely underworked which is costing the taxpayer a fortune, so we are paying excessive tax for little to no return. Tax is the worst possible cost to any business as you get zero return for it, most other expenditures for a business leads to some kind of return. Tax just drains business and takes from reinvestment.

I have to agree with John and disagree with Tipp man. Tax does not drain the buisness - it incentivises reinvestment. Also the days of bashing the public sector are gone. I'm not a public sector worker but i know they've taken huge hits and they are not in a position to manipulate tax returns. The USC is only hitting farmers now and the reality is that many of them have not planned their taxation accordingly. The reality is that we have been an extremely low tax economy for the last 10 years which partly got us into this mess.

whelan1

Username John wrote: »

Hmmm, tax is one those things of life... everyone should pay it.

There are many threads on here re are you good mechanically, or how good a judge of cattle are you.
Farmers need to be a jack of all trades - surely one of the trades is book-keeping / accounting?
This allows a level of forward planning, to tell you when to invest in machinery, improvements?

Now, I appreciate I dont have a big farm, with lots of expenses, inputs, outputs, so its easy for me to talk when I can track farm money on one page nearly

its the usc that has us all screwed ... we all know we have to pay tax.. its just getting used to this new usc

Tipp Man

Box09 wrote: »

I have to agree with John and disagree with Tipp man. Tax does not drain the buisness - it incentivises reinvestment. Also the days of bashing the public sector are gone. I'm not a public sector worker but i know they've taken huge hits and they are not in a position to manipulate tax returns. The USC is only hitting farmers now and the reality is that many of them have not planned their taxation accordingly. The reality is that we have been an extremely low tax economy for the last 10 years which partly got us into this mess.

Please tell me your not serious with this post

1. Tax is an absolute drain on all business, not just farming. As i said earlier it is the 1 expense where you get ZERO in return. If you only reinvest in business just to avoid tax then you shouldn't be in business. If I didn't have such a large tax bill every year then I'd have MORE to reinvest. Strange logic from you
2. If you think for 1 moment that the cuts in the public sector are anywhere near complete then i am afraid you are in for a shock. We have some of the highest paid civil servants in the world in this country, a country which is one of the most indebted on the planet. Yet we have teachers off on 3 months holidays now, getting double pay if they supervise/correct exams etc etc. We are short about 18bn between government income and government expenditure and this idea that it will be down under 3% by 2015 is pure madness as its based on unachievable growth - we'll be lucky to see any growth in this country in the next 5 years. We still have about 75,000 more public servants now than at the turn of the century. It is pure madness and until this public spending mess is sorted out then the country is proper f##ked
3. If you think that being a low (not a word i would use at all) tax economy is a reason for us being in the mess we are then i think you are fundamentally wrong. Try massive public spending increases (increased by 100% in about 5 years) and along with the banks is by far the single biggest issue in this country, overpaid private sector, banks lending like idiots, government just being idiots, unions actually running the country, a complete lack of incentives to create productive businesses as opposed to building businesses

It is going to get worse in this country before it gets better IMO