The Taxation of income of Part time Farmers

In the last 12 months, I have had more and more part time farmers enquiring as to whether they need to file a tax return to the Revenue Commissioners. The simple answer to this is yes if they are in receipt of farming income. What is also more and more apparent is the tax office now knows who is in receipt of farming income and have begun posting out a form 12 tax return to those individuals.

The Form 12 is a paper based annual Income Tax return in Ireland for people whose primary sources of income are their PAYE income. Most PAYE WORKERS will not have to complete a Form 12.  It is only necessary to complete a Form 12 if Revenue requests it:

  • You could be chosen at random to complete a Form 12.
  • If you have income other than PAYE income – for example of you have a farm and receive entitlements such as reps and single payment scheme you will be selected to complete the form.

Different income types assessable under Form 12 include:

  • Rental Income
  • Dividend Income
  • Foreign incomes

The main reason that Revenue request that a form 12 is completed is because all income is liable for tax. For this reason it is important to keep a record of you payments and receipts.

The deadline for filing a Form 12 with Revenue is 31 October in the year following.  For example if you received a form in 2013 requesting you to complete a Form 12, you will have until the 31 October 2012 to submit your accounts for 2012.


It is important to comply with the request from Revenue as late filing can lead to penalties of either 5 or 10% and interest accruing on any outstanding tax liabilities. The severity of the penalty will depend on a number of factors, such as the amount of tax owed, the time delay between the tax return being submitted and the actual due date of submission.


Your expenses can be offset against your farming income in order to reduce your tax bill.

For example if you are a farmer it is important that you hold on to your expenses for the maintenance and upkeep of the farm and also the cost of looking after your livestock.

Some of the receipts that can reduce your tax bill can include receipts such as:

  • Connacht Gold receipts for maintenance, feedstuffs etc.
  • Vet bills.
  • Repairs, digger work and construction of buildings such as slated sheds, fencing etc.
  • A portion of Vehicle costs i.e. Car, Jeep tractor & farm machinery expenses which can include fuel, repairs and parts costs.

The good news

In the event of your farm business making a loss in the year, you can use offset this loss against your PAYE income and look to claim a tax refund. You can also look at claiming back any VAT you have spent on fixed structures around the farm. This can be for things like, construction of a farm road, sheds, drainage, fencing etc. You can go back the last 4 tax years also if you forgot to claim any previous Vat paid. This can sometimes more than cover any cost in having your tax return filed.

The important point to note though, if you have received a Form 12 is to file it.

If you have any queries or need advice in relation to Form 12 please contact us @

McDowell & Co Accountants Stephen St, Sligo     (071 91 47580