During an information event on Transferring the Family Farm in Letterkenny, Co. Donegal on Tuesday (October 4), much interest revolved around farm partnerships.
In a previous article, Agriland looked at what was required to form a registered farm partnership (RFP), so in this article, we will take a look at what farmers can benefit from by forming a RFP.
The benefits of joining a RFP include:
- Taxation incentives;
- DAFM scheme benefits.
Taxation incentives
Taxation incentives Teagasc said that can be availed from RFP include maximising low-rate tax band, access to young, trained farmer stock relief and access to enhanced stock relief for the parents.
Maximise low-rate income tax band
Teagasc say that depending on the profit-sharing ratio within a RFP, that the possibility is there for each person involved to be able to avail of the low-rate tax band.
One example given was that an RFP with an equal profit share split, could earn up to €105,900 at the low-income tax rate.
Access to young, trained farmer stock relief
Another taxation benefit outlined by Teagasc for those involved in a RFP was that on stock relief.
A young, trained farmer can claim 100% stock relief on the increased stock value of his equivalent share of the profits from the farm.
The maximum relief available is €70,000 under this scheme, the stamp duty exemption scheme and the succession farm partnership scheme.
Access to enhanced stock relief for the parents
Furthermore, Teagasc say that enhanced stock relief can be sought at a rate of 50%, with the maximum that can be claimed over a three-year period being 15,000.
DAFM scheme benefits
DAFM scheme benefits Teagasc outlined included the young farmers scheme, young farmer national reserve, targeted agricultural modernisation scheme (TAMS II) and the collaborative farming grant scheme.
Collaborative Farming Grant Scheme
If thinking about setting up a RFP, grant aid, Teagasc say, of 50% is payable on the establishment costs of setting up.
Spend is maxed out at €5,000 thus providing a maximum grant of €2,500. Importantly, receipts and invoices are required to avail of this grant.
Young farmers scheme
Where one person within a RFP is a young, trained farmer, an application can be made.
Teagasc say that a top up payment may be secured on a maximum of 50 activated entitlements declared by the RFP on the Basic Payment Scheme in the year of applying.
In order to potentially avail of this top up, the young trained farmer must be:
- Named on the partnership herd number;
- Named on the bank account;
- Declare effective and long-term control of the farm business.
Young Farmer National Reserve
A young farmer in a partnership may apply to the scheme to receive a top-up on low-value entitlements or apply for new entitlements that have no entitlements attached to them, Teagasc say.
In terms of a top-up, the maximum number of hectares one could apply for is 90. Moreover, an off-farm job has a limit of €40,000 in relation to this scheme.
Targeted Agricultural Modernisation Scheme (TAMS II)
The most known and talked about scheme is TAMS and for those in a RFP, they can avail of a double investment ceiling under TAMS subject to meeting all necessary criteria.
So rather than a ceiling of €80,000, an RFP is potentially in the running to be eligible to a ceiling of €160,000.
Where no young, trained farmer is in the RFP, grant aid of 40% up to €160,000 is available.
While where a young, trained farmer is in the RFP, grant aid is 60% up to €80,000 and 40% on the other €80,000.