Forming a Registered Farm Partnership (RFP) can be a great way to increase succession options, improve profitability, enhance work-life balance, reduce Income Tax, obtain 50% stock relief and avail of a potential double ceiling on investments that are eligible for the TAMS II Capital Grant.
However, changing your farm structure is a major decision which requires careful planning. When considering forming an RFP, Ifac recommends adopting a 3-step approach.
STEP 1 — Assessment
The first step is to assess the business case. Relevant tax, legal, succession and Department of Agriculture factors need to be examined and potential pitfalls identified and resolved. This is a key phase as it ensures that you are entering the partnership for the right reasons and at the right time. There is nothing wrong with postponing a business structure change if the business case does not make sense or the timing is wrong.
STEP 2 — Execution
If you decide to go ahead, the second step is getting the paperwork in order so that your partnership documentation can be submitted to the Department of Agriculture’s RFP unit and your new partnership can go ‘live’. Your herd number will need to be moved, a partnership agreement drafted, a tax number obtained and a partnership bank account opened. Herd registration forms must be sent to your local DVO for processing. (Seek advice on how best to operate multiply herd numbers within an RFP.)
STEP 3 — Implementation
Your accountant will tell you the date that your new structure is trading from. This is when you start using your new partnership bank account for all farm lodgments and purchases. You must inform your customers and suppliers and ensure that invoices are issued using the new partnership name.
To achieve a successful RFP, it is essential that the three steps outlined above are carried out correctly. Thereafter, the partnership should be reviewed every year and the capital account signed/agreed by all partners. For advice and assistance, contact your local ifac office where our team can provide more information and guide you through the process.
RFP CHECKLIST
Banking
✔ Are all my sales and purchases going through the partnership bank account?
✔ Have I moved all farming/business direct debts/standing orders to the RFP account?
✔ Have I moved my overdraft (if necessary) to new account?
Sales/Purchases
✔ Are all my sales and purchase invoices in the partnership name?
✔ Mart purchase/sales documents?
✔ Coop milk/trading statements?
✔ Factory documents?
✔ General invoices?
Grants/Schemes
✔ Has my agriculture advisor applied for BPS using my RFP number?
✔ Have they moved all other relevant schemes (eg GLAS, TAMS) to the new RFP?
✔ Are herd numbers being used correctly?