The interpretation of the tax code is not always clear and some aspects may eventually be decided by a test case. Farmers should always seek independant advice on all aspects of taxation. Our opinions here, are just that, mere opinions.
The profits or gains arising from the occupation of woodlands in Ireland, managed on a commercial basis and with a view to the realisation of profits, shall not be taken into account for any purpose of the Income Tax Acts, Section 18, Finance Act 1969. Changes introduced in Section 17 of the 2006 Finance Act, and modified in 2007, and being further modified in the 2010 Finance Act, limit the amount of reliefs, including woodland exemptions, used by certain high earners. These are deemed to be those with income of €125,000 or more annually from all sources and also having specified reliefs (such as capital allowances) and exempted income, such as profits from woodlands, of €80,000 or more. This could give rise to additional tax in some circumstances. In all cases where the woodland profits for an individual exceed €125,000 in a year a tax charge could arise so even an average sized clearfell needs to be planned to minimise tax. Forest owners should keep accounts of income and expenditure for all years.
In effect this means that Forest Grants, Forest Premiums, sale of forest thinnings and sale of clearfell are all exempt from Income Tax. It is thought to include processing up to the stage of Firewood, basic planks and possibly chipping. Also includes Christmas trees. When clearfelling comes around, remember, it can take place over a number of years, also the cost of replanting is avalid expense.
An Income Levy of 1% and
Profits from the occupation of woodlands managed on a commercial basis with a view to profit are taken into account when estimating reckonable income for PRSI purposes.
Forestry is similar to farming for VAT purposes. Claims by unregistered farmers for a VAT refund should be sent to: Revenue Commissioners, River House, 3rd Floor, Charlottes Quay, Limerick (Lo-
For unregistered farmers, it is important to have a written contract, including pricing which excludes VAT. When selling timber, a farmer can add VAT at a flat rate of 5% to compensate for VAT paid on costs. VAT registered contractors may charge VAT at a rate of 13 1/2%.
Value Added Tax (VAT) may be reclaimable
Forestry, for VAT purposes, is similar to farming activities. Non registered farmers may, in some cases, be able to claim VAT on expenditure on ground preparation and fencing. Claims by Unregistered Farmers for Refund of Value Added Tax should be sent to:
Where the owner is not registered for VAT, it is important that you have a written contract with the purchaser, stating the conditions including the price per cubic metre, this price should not include vat. For standing or felled timber, an unregistered owner can add flat rate vat @ 5.2% to an invoice to compensate for vat inputs that were incurred but cannot be recovered. A registered harvesting contractor will charge vat at a rate of 13.5% to the farmer, the invoice must show the farmers name.
Where the owner is registered for VAT, all sales of timber are subject to vat at the rate of 23%. A normal farmer does not have to register for vat until or unless his income from non-
Relevant Contracts Tax
Introduced in 2012, it obliges the “principal contractor” to inform revenue and possibly deduct up to 35% from payments to sub-