Now is the time for farmers to begin planning for 2023’s tax bill and to start clearing outstanding bills to avoid a scramble in December, ifac advised farmers at a recent Kepak farm walk in Co Roscommon.
Farm support adviser Garry McHugo said that a simple budget drawn up now, as most of the money starts to flow in on drystock farms, can eliminate much of the hurrying to keep farm finance in order at the end of the accounting year.
“We are coming into a time of year now where the majority of the income is coming in, between the Single Farm Payment and stock sales. It is really important that we sit down and sort out a bit of a plan, coming into the back end,” McHugo commented.
“Our advice would be that everybody should do some form of a budget coming into the back end.
“It doesn’t have to be overly technical. It’s just putting down the cattle you’re going to sell, the sheep you’re going to sell, the money that’s coming in for the subsidies and who is owed what.
“Try and get away from the idea of going into Christmas week scrambling with a cheque book, paying lads, when you don’t know what is there to work with.”
A budget will also allow farmers to “get an idea of the tax bill” that will be left at the end of the year, allowing them to plan on reducing the amount payable if they wish to invest back into the farm.
McHugo suggested that the big machinery or tractor purchases chosen by farmers are often not the best options to reduce the tax bill on a small farm.
“Again, we’ll generally get people who are scrambling to avoid a tax bill investing in machinery.
“Great, but with your €40,000 tractor, you’re only going to get an eighth of that the first year – that’s €5,000. You’re spending a good share of money for a relatively small reduction of the tax bill,” he said.
Other investments with a better payback could include fencing, bringing water to paddocks and reseeding, the adviser added.