Joint Herd Number and the Tax Man!

wicklow_hunter

Hi All

Planning on filling a tax return this year for 2020
Recently completed a transfer of family farm
Currently set up as a joint herd number with my Father

Can any one advise what min % that I should be taking out of the farm or what the minimum split should be?

Working full time as a paye

Getting mixed opinions from Teagasc Advisor claiming 95% 5% splits are not uncommon in favour of my father

Accountant is advocating a conservative 80% 20% split is the minimum

Interested to know what lads on here are doing

Thanks in advance

epfff

wicklow_hunter wrote: »

Hi All

Planning on filling a tax return this year for 2020
Recently completed a transfer of family farm
Currently set up as a joint herd number with my Father

Can any one advise what min % that I should be taking out of the farm or what the minimum split should be?

Working full time as a paye

Getting mixed opinions from Teagasc Advisor claiming 95% 5% splits are not uncommon in favour of my father

Accountant is advocating a conservative 80% 20% split is the minimum

Interested to know what lads on here are doing

Thanks in advance

Doing 50/50 here
Accountant recommends more relastic split as other partner not really involved. He claims in a past audit client
Was penilised as it was very obvious one partner was not involved in the farm

Aravo

There are a number of threads on this very topic which may assist. Search for joint herd number. If you go down the joint herd no. you cannot avail of any 60% grants. I think some are avoiding the joint herd number especially if any big builds are planned.

relax carry on

It's literally a matter of fact. You are operating a farm partnership and should have figured this out before starting. Randomly choosing a figure based on nothing is not a good idea.

So what is the purpose of the partnership? How much capital did both parties invest? How much involvement do both parties have and how much income do both parties derive from it?

To rob a bit of text from Teagasc;

Joint herd numbers are not registered farm
partnerships with DAFM but are deemed to
be partnership under 1890 Partnership Act

Written Legal Template agreement should be
completed, other wise 1890 Act becomes
default agreement and assumes a 50:50
partnership.

J.O. Farmer

relax carry on wrote: »

It's literally a matter of fact. You are operating a farm partnership and should have figured this out before starting. Randomly choosing a figure based on nothing is not a good idea.

So what is the purpose of the partnership? How much capital did both parties invest? How much involvement do both parties have and how much income do both parties derive from it?

To rob a bit of text from Teagasc;

Joint herd numbers are not registered farm
partnerships with DAFM but are deemed to
be partnership under 1890 Partnership Act

Written Legal Template agreement should be
completed, other wise 1890 Act becomes
default agreement and assumes a 50:50
partnership.

In such situations normally it's not a full time enterprise for both parties and most if not all the capital comes from the father. It's more part of a succession plan than a totally new business.

The reason to bias towards the father is the father is possibly retired and his income will be taxed at the lower rate of tax while the son or daughter may already be paying the top rate of tax off farm.

Personally I'd go with the accountants recommendation. They deal with revenue and should be familiar with the rules and implications of different splits. They will also have full details of personal circumstances for both parties which nobody would post on a public forum.

wicklow_hunter

relax carry on wrote: »

It's literally a matter of fact. You are operating a farm partnership and should have figured this out before starting. Randomly choosing a figure based on nothing is not a good idea.

So what is the purpose of the partnership? How much capital did both parties invest? How much involvement do both parties have and how much income do both parties derive from it?

No debt on farm , I work evenings and weekends and have been doing so since the day I was old enough to walk / work Realistically my father runs the show and has put in a lifetime of hard work and graft making it into the farm it is today. honestly we are not compatible working together. He has problems with taking any advice or changing things around for the better. It seems to be a common theme with father / son farm relationships. Right now I have my own career which demands multiples of what’s involved keeping the farm ticking over.

Farm makes maybe 30-40k (beef enterprise) not enough for two families. I make double that amount so to does my partner (wife) I would prefer not to pull out of the farm income as it doesn’t just feel right.

Lots of old threads and some conclude 50/50 or 80/20 split is the norm.

relax carry on

wicklow_hunter wrote: »

No debt on farm , I work evenings and weekends and have been doing so since the day I was old enough to walk / work Realistically my father runs the show and has put in a lifetime of hard work and graft making it into the farm it is today. honestly we are not compatible working together. He has problems with taking any advice or changing things around for the better. It seems to be a common theme with father / son farm relationships. Right now I have my own career which demands multiples of what’s involved keeping the farm ticking over.

Farm makes maybe 30-40k (beef enterprise) not enough for two families. I make double that amount so to does my partner (wife) I would prefer not to pull out of the farm income as it doesn’t just feel right.

Lots of old threads and some conclude 50/50 or 80/20 split is the norm.

Without a written partnership agreement, the split is 50/50. If you wish to have any other split, the partnership needs to be registered officially and declare the split. The partnership files its own form declaring the split of profits and each partner files their own form 11. Your accountant should be able to explain further. Teagasc has a fairly good pdf on it.

https://www.teagasc.ie/media/website/rural-economy/farm-management/8_Farm-Partnership-Workshop-Presentation-2017.pd

Tig98

relax carry on wrote: »

It's literally a matter of fact. You are operating a farm partnership and should have figured this out before starting. Randomly choosing a figure based on nothing is not a good idea.

So what is the purpose of the partnership? How much capital did both parties invest? How much involvement do both parties have and how much income do both parties derive from it?

Pfftt, quit acting like its a business, it's a lifestyle...

Unfortunately, this is how it is most the time id say, and why I'd never go into partnership with my father.