Tax Appeals Case – Farm Losses Set Against Other Income
In this video John and Yvonne look at tax appeals case 33TACD2019, which deals with Farm Losses Set Against Other Income – S.311 TCA.
Get more valuable CPD hours by joining The Irish Accounting and Tax Summit!
Transcript of Video
This farming one that the manual has been updated for this, but I suppose this is just an interesting one for a number of points of view, and it was a 2019 case, but I think it’s just, it’s just always remember to refresh so with farming any losses you’ve incurred for as long as you haven’t incurred loss for three consecutive periods, you can use the losses against under section 381 against the total income of the individual and their spouse.
So it’s great in that. You can set that against the management of the tax for your POI, or other income and then the farm income. Um, but first of all, I suppose is important to highlight that regarding the three year exclusion, and inorder to be there in the first year. You must be operating the farm on a commercial basis with a view to realization of profits.
So if you only, if you have maybe whatever land 30 acres, and you’ve got four or five cows, how can you say your realization of profit here? Potentially? So revenue will be right in Saying well actually, you’re not allowed any loss relief in one years to three years because of the fact that you have no intention to ever make profit.
so you have to be into it in first place. Yeah. Yeah. So I suppose section six six three two was, is the area that deals with three years, but it does allow that extension, in exceptional cases, um, on a case by case basis, but that is exception. So I just know a lot of the times there are farmers who are continuing to claim for losses where its gone past the three years,
but you just need to watch it because it is exceptional cases here and it can be pulled from you. And this is what this case is about this case, the appellant and her father, had small farm in 2001,
the dispute, didn’t come out until 2007, but he had farmed during that period. Um, so they looked at the,
the, the losses being claimed each of the years from 2007, 2014, in 2007, they said, now you’ve had three years, so you’re not allowed anymore. So we’d have the tax please. Um, so this went to, uh, to the, to the appeal commission. Obviously you say well look theirs exception circumstances. So there was exception circumstances here.
the appeals commisioner found its poor quality land. The appellant wasn’t in necessarily in a really high paying jobs. So they were saving, they were continuously doing up the property, doing the fencing, buying different machinery that wasn’t there before putting it on fencing. Um, and there was no plans at the time that had. So it was all going to take a little bit of time to do it.
And for that reason, and because now it’s became beginning to become profitable at the exception there for more than three years applied. And they, it, yeah, the intention there was to, um, you know, eventually yeah, in profit. And you can see that the appeals commission thinking in relation to where he was going to, you know,
there was there with, they were proven it every year to, be doing something new, but this isn’t taken to be, this is an exceptional. Yeah. So don’t, you know, if you’re at say with the dispute, everything going on here. Exactly. So it was exceptional circumstances and I mean, you probably have a hard battle. Everyone’s going to try and get that,
you’re at risk. If you’re going over three years, if you haven’t got those exceptions or there’s a plan in place to turn it around. And that plan is actually there.