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Tax & Tax Planning Presentation – 24 June 2011 Clonakilty Agricultural College Kieran Coughlan, Coughlan Accounting & Taxation Services Limited, 086-8678296.

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Presentation on theme: "Tax & Tax Planning Presentation – 24 June 2011 Clonakilty Agricultural College Kieran Coughlan, Coughlan Accounting & Taxation Services Limited, 086-8678296."— Presentation transcript:

1 Tax & Tax Planning Presentation – 24 June 2011 Clonakilty Agricultural College Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

2 Background Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

3 Introduction Kieran Coughlan – Attended Darrara in 1999/00 – completed Certificate in Agriculture – First Class Honours degree in Accounting in UCC 2001 – 2004 – Completed Professional Accounting exams in 2007 and Professional Tax Exams in 2008 – national prizewinner – Registered Tax Consultant – operating all over Cork, specialising in Farming Tax – Weekly articles in Farming section of the Irish Examiner (every Thursday) – ICMSA Tax Committee Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

4 What’s is all about Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

5 What’s is all about Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

6 What’s is all about Kieran Coughlan, Coughlan Accounting & Taxation Services Limited, TAX

7 What’s is all about Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

8 Key message “Work smarter, not harder" Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

9 Questionaire Please complete your questionaire! Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

10 How Tax Works! Sales milk€120,000 Sales cows €20,000 Total Sales€140,000 Expenditure-Fertiliser (€20,000) -Feed (€25,000) - Personal expenses (€20,000) - Purchase Tractor (€40,000) Total expenditure(€105,000) Cash position+€35,000 Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

11 How Tax Works! Cash position does not equal tax position! Farm sales€140,000 Farm day to day purchases (€45,000) Accounting Profits €95,000 Less 1/8 th allowance for machinery (€5,000) Taxable profits €90,000 Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

12 How Tax Works! Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

13 2 heads are better than one even if its cabbage! Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

14 Tax savings by splitting income! Kieran Coughlan, Coughlan Accounting & Taxation Services Limited, Tax saving = €9,219

15 Involving family members in farm Tax efficient method of splitting income amongst family – Benefit from tax band and exemption limits for PRSI, USC and Income Tax – Particularly useful at retirement or starting off Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

16 Saving Tax Short term tax planning: – Income averaging – Stock relief for young trained farmers and others – Reclaiming VAT for unregistered farmers – HP, Leasing and Capital Allowance options – Renting and leasing of land – Involving family members in the business Long Term Tax Planning: – Retirement planning – Passing farms on to the next generation (stamp duty, capital gains tax, inheritance tax) Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

17 Income Averaging Example – farmer with income as follows: Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

18 Stock Relief Opportunity for farmer to build up stock in his herd tax free. – Example 50 calves bought for €100 each, sold following for €400 each – Profit €15,000 Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

19 Stock Relief Opportunity for farmer to build up stock in his herd tax free. – Option 1: Example 50 calves bought Feb 2010 for €100 each, assumed no costs, sold in December 2010 for €400 each – Profit €15,000 – fully taxable – Option 2: Calves held instead until Jan 2011 – Accounting profit of €15,000 in accounts at December as stock values have increased. This is fully tax free. For 2011, opening stock valued at €20,000, sales €20,000 – no taxable profits in either year! Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

20 Reclaiming VAT Say you are considering buying new Bulk Tank or a second hand one from a farmer New tank contains VAT at 21% (or 13.5% in some cases) This makes second-hand tank less financially attractive! Note another option would be to buy second- hand tank off a dealer Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

21 Hire Purchase versus Leasing Say New Tractor – cost €60,000 Different tax treatment HP generally more efficient if VAT registered Ability to manipulate profits with lease agreement Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

22 Land Leasing Exemption from income tax for recipient if: – Over 40 and lease is: > 5 years€12,000 >7 years€15,000 >10 years€20,000 Can make con-acre much cheaper and make expansion plans more definitive Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

23 Retirement Planning Consider Pension Options – PRSA – Self Directed Investment in alternative assets – rental properties, land etc Continuation of income post transfer Potential PRSI savings Exemption limits for over 65’s Beneficial for providing for siblings through parents Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

24 Succession Planning Capital Gains Tax exemption on disposal: – Over 55 – Farming more than 10 years – Owned the land for more than 10 years Capital Acquisitions Tax (Gift/Inheritance) – Limit €332,084, excess 25% – Reduction of 90% in value of land being received for tax purposes if pass the farmer test Stamp Duty – Exemption if under 35, and continue farming for 6 years Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

25 Future Tax Outlook Reduction in reliefs Increase in taxes (per FG/Labour policies) Planning essential for maximising your tax efficiency Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

26 Questions ? Kieran Coughlan, Coughlan Accounting & Taxation Services Limited,

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