Running our block as a business

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10 years 5 months ago #36369 by Farmersden
I was recently talking to a work colleague who could not believe that we did not run the "farm" as a business. Our "small holding" allows us to be virtually self sufficient for food and having replaced most of the fencing and building up the paddocks and stock were hoping to sell surplus eggs, veg. lambs etc. to help cover the costs. We both work full time and that supports the improvements on the farm but if we set the farm up as a business I have been told we could claim for some of those costs?
Anyone got any experience of how you go about it and if it is worth it??:confused:

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10 years 5 months ago #474606 by Sue
Replied by Sue on topic Running our block as a business
I think you may find there has been quite a bit of discussion on this in previous threads-giving both sides of the arguments!

Whilst to claim back the expenses and registering for gst may look OK on the surface, there are a few pitfalls along the way and it really depends on how big the business gets! For instance selling surplus eggs. If you have more than 100 hens, you will have to a have a Risk Management programme or RMP. Then you will have to pay gst for the goods you sell. If you sell eggs and vegetables to passers by, you will have to add gst to what you sell, record all your sales and issue gst dockets.

A good accountant will be better able to advise you on your own circumstances than the multitude of opinions you will get from here!

We are registered for gst, and started off with a 13 acre block, just breeding cattle and just had to declare 'we intended to make a profit' in the future. Like you we both had outside jobs to pay for development and buying in stock. I think the stipulations these days are a bit more strict for lifestylers and smallholders!!

Sue
Labrador lover for yonks, breeder of pedigree Murray Grey cattle for almost as long, and passionate poultry person for more years than I care to count.

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10 years 5 months ago #474607 by kindajojo
Yes you can claim the costs i.e. GST, but remember when you sell items you have to pay tax on the income.

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10 years 5 months ago #474608 by keppelk
There's some helpful info on the IRD website:
* do you need to register for GST? www.ird.govt.nz/gst/gst-registering/register-who/
* advantages/disadvantages of voluntary registration www.ird.govt.nz/gst/gst-registering/register-who/register-voly/
* what you need to do once you're GST registered www.ird.govt.nz/gst/gst-registering/register-after/

Like Sue mentioned - always best to discuss your own situation with a good accountant.

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10 years 5 months ago #474613 by Deanna
After reading everything we could about this option after buying in Dec last year, we opted not to.

25 acres, 1400 Blue Gums, Wiltshire sheep, 5 steers, 2 cows, ducks, chickens, bees, dog, cats, retired, 1 husband and 3 grandkids.

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10 years 5 months ago #474614 by max2
I second what has already been said.

1. Heaps of feedback on forums discussing experience, usually under the ''should we register for GST'' type heading.

2. See your accountant, or an accountant who specialises in small farm income/losses to discuss your financial position and hopes/plans.

We have one larger property GST registered and the other not which is the one we live on (16 acres) that adjoins the other. This was set up this way to suit our circumstances.

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10 years 5 months ago #474619 by RhodeRed

Farmersden;477613 wrote: I was recently talking to a work colleague who could not believe that we did not run the "farm" as a business. Our "small holding" allows us to be virtually self sufficient for food and having replaced most of the fencing and building up the paddocks and stock were hoping to sell surplus eggs, veg. lambs etc. to help cover the costs. We both work full time and that supports the improvements on the farm but if we set the farm up as a business I have been told we could claim for some of those costs?
Anyone got any experience of how you go about it and if it is worth it??:confused:


WHY, would you seek to invite the nanny-state further into your lives than they already are. They can do nothing to help you and everything to remove revenue from you and confound you.

What you WILL receive are all the *cough* "benefits", (gotta love legalese, if a cop writes you a ticket, the nanny-state considers it is bestowing a "benefit" upon you, no-s**t) of having to comply with this and that and jump thru' all the statute endorsed hoops - all for a very reasonable price no-doubt. :rolleyes:

Just my five bobs worth.

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10 years 5 months ago #474640 by LongRidge
Now that you have done most of the capital projects there is not much purpose in having to have your ranch income and expenditure accounted for.
You can claim expences and income without being GST registered. Or at least you could when my friend's accountant did it for them. They claimed the expences off their wages, and added the income to their wages. That avoids having to pay tax at a business rate.

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10 years 5 months ago #474643 by Aquila
Inland revenue are clamping down on lifestyle blocks and rentals. If you buy a place, gst register and make no profit in 5 years, they will cancel your registration meaning you then have to pay the gst for the last 5 years.

Only register if you are certain you'll make a profit

Sent from my GT-I9300 using Tapatalk

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10 years 5 months ago #474649 by Name123

Aquila;477652 wrote: Inland revenue are clamping down on lifestyle blocks and rentals. If you buy a place, gst register and make no profit in 5 years, they will cancel your registration meaning you then have to pay the gst for the last 5 years.

Only register if you are certain you'll make a profit

Sent from my GT-I9300 using Tapatalk

That seems somewhat disingenuous. If you're doing well, they do well. If you don't do as well as you planned, they cut your throat and throw you overboard.

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10 years 5 months ago #474651 by Blueberry

Name123;477659 wrote: That seems somewhat disingenuous. If you're doing well, they do well. If you don't do as well as you planned, they cut your throat and throw you overboard.


and that surprises you because???[}:)]

[;)] Blueberry
treading lightly on mother earth

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10 years 5 months ago #474658 by ccrk9

Farmersden;477613 wrote: I was recently talking to a work colleague who could not believe that we did not run the "farm" as a business. Our "small holding" allows us to be virtually self sufficient for food and having replaced most of the fencing and building up the paddocks and stock were hoping to sell surplus eggs, veg. lambs etc. to help cover the costs. We both work full time and that supports the improvements on the farm but if we set the farm up as a business I have been told we could claim for some of those costs?
Anyone got any experience of how you go about it and if it is worth it??:confused:

I guess it would depend on the size of your block and how much you can produce. Its all very well being able to claim expenses but then you have the tax on what you sell, paye (if any), ACC as a business owner on top of what already comes out of your earnings as an employee at your other jobs - and ACC are as bad as IRD in our experience from running our own company (not anything to do with our lifestyle block), compliance costs etc. The list just goes on and on. Then, if you want to sell the land at some stage there will be more GST on the land sale.

I know there used to be a threshold that you could sell goods before you had to register for GST, no idea what these days but it may pay to go this way and not register. Food for thought.

We just do a few cash sales of some products that gives us bit of cash, and barter quite a bit which gets us a better outcome. What about the Green Dollar Scheme ? Its running very well here in Wairarapa. It wont recover your costs that you have already spent but it may be of help in future.

The greatest fine art of the future will be the making of a comfortable
living from a small piece of land. ~ Abraham Lincoln ~

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10 years 5 months ago #474660 by ccrk9
the other question I have is - Do you really have the time to run a business for your lifestyle block/small holding when you are working full time off the land ? Its hard enough work living and maintaining the land without working full time.

The greatest fine art of the future will be the making of a comfortable
living from a small piece of land. ~ Abraham Lincoln ~

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10 years 5 months ago #474661 by max2

Aquila;477652 wrote: Inland revenue are clamping down on lifestyle blocks and rentals. If you buy a place, gst register and make no profit in 5 years, they will cancel your registration meaning you then have to pay the gst for the last 5 years.

Only register if you are certain you'll make a profit

Sent from my GT-I9300 using Tapatalk


That isn't quite right for all situations. For instance a pre 1989 forestry property will have approx. 28 years of no income but claimable expenses, and then suddenly will have considerable (unless the forest owner has registered for carbon credits and all that crap which is a different kettle of fish again) bulk income, less any harvesting and possible re-planting/fencing costs.

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10 years 5 months ago #474674 by Farmersden
Many thanks to you all for your advice and for sharing your thoughts.. we are planning to see an accountant and you have raised some interesting questions we can ask.. for that thank you :)

We do have the land and the potential to "make a profit" but are more working towards self sufficiency so that when we retire hopefully we can afford to stay on the farm! We were under the impression that declaring it as a business was the right thing to do.. now to find a good accountant and ask the questions.

Thanks again !

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