WHAT'S ANOTHER YEAR - TAX AND OTHER CHANGES IMPACTING ON FARMLAND.
Declan McEvoy, Senior Tax Consultant with IFAC Accountants outlines recent changes which impact on land sales and transfers.
NEW 80% WINDFALL TAX ON REZONED LAND
Introduced in the NAMA Act the purpose of this change is to charge income tax and capital gains tax at a rate of 80% on profits from the rezoning of land.
What is meant by rezoning?
Rezoning means a change in the zoning of land in a Development Plan or Local Area Plan made or varied on/after 30th October 2009 from non-development land-uses to development land-uses or from one development land-use to another development land-use including a mixture of such uses.
GET THE BEST DEAL FROM YOUR BANK
Customers should not be afraid to negotiate interest rates when they are taking out loans. It doesn't matter if it is to re-structure existing loans or to take out new ones. Too often, customers are so happy to have found a solution that they accept whatever interest rate is going. Banks are more focused on margins and have moved to pricing loans based on the cost of funds of a mix of one, three and six-month money. Customers who maintian a good relationship with their bank are in a stronger position to negotiate the best rates.
So what interest rates can you expect to negotiate? Find out the current Euribor rate and add a bank margin of 2 to 4%. Anything over this is bad value.
TAX PAYMENT DECISIONS FACING FARMERS
John O'Callaghan, Branch Manager of the IFAC Accountants Blarney Office for the past 26 years writes on the tax payment decisions facing farmers currently.
Because of low produce prices in 2009 and limited availability of credit from the banks the level of the 2009 preliminary tax payments and the financing of these payments is of significance to most farmers.
Impact of Levies and Income Averaging on the level of 2009 tax bills
The drop in 2009 farm incomes from 2008 will not necessarily mean there will be a proportionate reduction in 2009 tax bills because of
- Income and Health Levies, and,
- Income Averaging
BANKS LOOK AFTER THEIR OWN INTEREST - WHILE FARMERS PAY UP TO 19.75% INTEREST
Pat Comerford an IFAC Accountant for over 15 years and Manager of IFAC Accountants Carlow, outlines his concerns about bank charging practices.
An increase in the banks profits from its Irish Domestic Operations is central in their economic fight back. My concern is that many farmers will end up contributing to the banks higher profits through charges in the following areas:
- Current Account Penalty Surcharges of between 6 to 12%.
- Bank Loan Protection Insurance costs which may be reduced by up to 40%.
Current Account Penalty Surcharge
Bank current account penalty surcharges vary from 6 to 12% and are in addition to the normal interest on overdraft balances. This means if you do not comply with the fundamental current account rule you will be severely penalised.
FINANCE BILL 2009
Sean O'Donnell, Manager of IFAC Accountants office in Cahir, Co. Tipperary for over 20 years highlighted the contents of the recently published Finance Bill and its implications for farmers.
INCOME LEVY
Despite strong representations from IFA the Finance Bill makes no provision to allow a deduction for capital expenditure in calculating the levy.
The Budget provides that effective from 1st May 2009 the now notorious Income Levy will be doubled and the entry point at which one becomes liable has been reduced as follows: