Small farmers braced for 'Double whammy' tax bills
... but here's some simple steps you can take that might help to ease the burden
The widening of the tax net, combined with the better incomes generated in farming this year, has left many farmers facing much larger tax bills this autumn. In some cases, it will be the first time that farmers will ever have faced a tax liability.
The IFA's James Kane said that these smaller farmers will face a double whammy, since they will be liable for a tax bill relating to their earnings last year and a preliminary tax bill for this year all at the same time.
"Farmers earning less than €10,000 a year tended to be ignored by the Revenue because they fell outside the tax net," said Mr Kane.
The latest budgetary changes mean that a farmer with an income of up to €10,000 is now liable for a USC of €200, a PRSI bill of €300-400 if they are under 65, and an income tax bill of €230 if they are single.
"So now a farmer earning €10,000 has a tax bill of up to €830 for 2010 plus another €750 to cover his preliminary tax for the coming year," added Mr Kane.
However, the fact that any capital expenditure on farm machinery or buildings is now deductable before the USC charge is calculated will be a big help in keeping the tax bill manageable for the vast majority of farmers, according to Declan McEvoy of IFAC accountancy firm.
"I think the real problem is going to be getting farmers that haven't been required to file a return as their income was too low to attract a tax liability," said Mr McEvoy.
"Heretofore the State tended not to consider older farmers with income less than €10,000 to be liable for tax returns. But now that they are after every penny, everybody earning more than €4,004 a year (in excess of State pensions) needs to file a return or else they will face a penalty. Not only will they be penalised for not making a return, they will face additional penalties for late payments and interest on any money due."