Farm Structures - all your questions answered

Farm business structure is crucial to ensure you are working as effectively as possible while minimising tax. Gearoid Condon, Partner at ifac discusses the most frequent questions asked about Partnerships.

Why choose a Partnership?

The social aspect of a Partnership may be attractive in addition to the tax advantages as profits can be spread among partners.

You need to think carefully about whether you are suited to Partnership and whether you and your potential partner can work well together. Legal and tax advice are crucial as forming a Partnership has far-reaching consequences.

Gearoid Condon

Should I draw up a Partnership Agreement? 

Yes. The Partnership Agreement sets out the rules of the partnership and will determine how assets are distributed should the Partnership end.

Should I register the Partnership?

Registering provides certain tax benefits in relation to Stock Relief. Collaborative farming structures have a grant available for setup of a Registered Partnership.

Once registered, you can then transfer to the Succession Farm Partnership Register which provides an incentive of €5,000 for up to five years during the Succession Agreement term or until the successor(s) reach age 40.

What are the thresholds when transferring to my son or daughter?

 Your child is entitled to €310,000 of a lifetime gift and an inheritance up to the same amount. However, any assets previously transferred (e.g. a site or shares) will reduce this.

What about other reliefs?

Agricultural Relief reduces the taxable value of property, including land, by 90%. If they do not qualify, they may be able to claim Business Relief. If neither of these reliefs applies, your son or daughter will be liable for the tax on the full transfer value.

For more information on Farm Business Structures and finding the one best suited to you see ifac’s Farm Structures Guide at www.ifac.ie.