Teagasc Farm BusinessConference 2015

Registering a Farm partnership– the requirements.

John Downey, Meat & Milk Policy, DAFM

Background

•Ending of Milk Production Partnerships on 31 March 2015;

•Had to establish new register ;

•Legal situation - had to use TCA;

•New Register of Farm Partnerships from 1 April 2015 ;

•Over 1,000 farm partnerships on the Register – 550 former MPPs;

•New farm partnerships are across all the enterprises - but still mainly dairying

Registering a Farm Partnership– the requirements.

Registering a Farm Partnership– the requirements.

Legislative basis

2015 Finance Bill – the minor changes

•

(a) A primary participant .......... may apply to the Minister to enter thefarm partnership on the register and shall comply ......

(b) In order to be entered on the register, a farm partnership shall complywith the following conditions:

• (i) the farm partnership shall exist wholly for the purpose of carryingon the trade of farming;

• (ii) the farm partnership agreement shall be in writing and shall:– include information identifying the partners, the farm land farmed by the

partnership, relating to their shares in the partnership and to theoperation of the partnership;

– commit the partners to the agreement to a period of operation as a farmpartnership of not less than 5 years,

Registering a Farm Partnership– the Finance Bill

• (iii) the farm partnership shall have at least 2 members and not morethan 10 members;

• (v) of the members of the farm partnership—

– at least one shall be engaged in the trade of farming on farm landowned or leased by that person, consisting of at least 3 hectares ofuseable farm land, for at least 2 years immediately preceding thedate of formation of the partnership, and

– other than the person referred to above at least one is a naturalperson and has an appropriate agriculture qualification; holds anentitlement to at least 20% of the profits of the partnership; andshall not be a non-active partner

Registering a Farm Partnership– the Finance Bill.

(vi) other than an excluded farm asset, a partner in a farm

partnership shall not have an interest in any farm asset outside

of the farm partnership at any time during the period of

registration of the farm partnership........

Registering a Farm Partnership– the Finance Bill.

Definitions:

‘farm asset’, other than an excluded farm asset, means—

• (a) farm land,

• (b) an entitlement to common agricultural payments, and

• (c) livestock or machinery used for farming,

• but shall not include CPO land

Registering a Farm partnership– the Finance Bill

Definitions:

‘excluded farm asset’ means farm land or livestock or machinery used forany of the following farming activities where that activity is excluded,by the terms of the partnership agreement, from the partnership:

• (a) pig farming;

• (b) poultry farming;

• (c) mushroom farming;

• (d) forestry;

• (e) bloodstock farming;

• (f) intensive horticultural cropping;

• (g) on-farm milk processing, other than milking and storage of milk;

• (h) generation of fuel or electricity;

Registering a Farm partnership– the Finance Bill

Definitions:

‘farm land’ means land which includes a building (other than a building orpart of a building used as a dwelling) occupied by a partner for thepurposes of farming that land;

‘non-active partner’ means—

• in the case of an individual who spends not more than an average of atleast 10 hours per week personally engaged in the farm partnershipactivities;

‘primary participant’ is the precedent partner, within the meaning ofsection 1007;

Registering a Farm partnership– the Finance Bill.

Other issues:

• Payment to partnership account

• Cannot be a director and individual in a partnership

• Land not more than 75km apart

Registering a Farm partnership– the requirements.

Application process (in the envelope):

• The Farm Partnership Agreement

• The land folios and leases

• The confirmatory documents – education and bank

• The application form

• The On Farm Agreement (?)

• Note from Revenue Commissioners (from 1 Jan 2015)

Use the check list

Focus on some important elements of the

Specimen Farm Partnership Agreement.

This Partnership agreement dated the ___________ is madebetween XXX (hereinafter called the “First Partner”),

• - AND -

• YYY (hereinafter called the “Second Partner”)

• E. The Herd Number allocated to the Partnership is

• _____________________

6.1.The Partnership business shall be carried on under the name of: ;

7.1 The Partnership shall commence on [ ] and shall continue for aminimum term of [ ] years. It shall continue thereafter until dissolvedunder the terms of This Agreement.;

12.7 All withdrawals from the Partnership Bank Accounts shall be by an agreedmethod between the parties and shall be authorised by:;

24.1 A Partner can give notice to the other in writing of dissolution of thePartnership and the Partnership shall be dissolved on the expiry of six monthsfrom the date of service of such notice provided that a minimum term of [] years from the Commencement Date shall have expired.

• FIRST SCHEDULE• (Schedule of Lands to be used under Licence by the

Partnership)•• THIRD SCHEDULE• PARTNERSHIP CAPITAL• The First Partner hereby agrees to transfer the following

assets to the Partnership and they shall form the FirstPartner’s contributions to the Partnership capital.

•••

Registering a Farm Partnership

The Agreement form

• FOURTH SCHEDULE• NON CAPITAL RESOURCES• 1. The First Partner has made the following assets available for

use by the Partnership. These shall not form part of thePartnership capital.

• SIXTH SCHEDULE• DIVISION OF PROFITS AND LOSSES• The Partners in the Partnership shall agree to one of the following

options:•

• PART I Partnership Details•

Farm Partnership Name: ...........................................................................................................................• Farm Partnership Address: ...........................................................................................................................• Farm Partnership Email Address: ...........................................................................................................................• No. Of Partners: ...........................................................................................................................• Nominated Partner for correspondence, including in relation to all DAFM Schemes. (This partner is required to

have an existing herd number): ...........................................................................................................................• Farm Partnership Mobile No. (for text alerts. This number will be used for correspondence in relation to all

DAFM Schemes): ...........................................................................................................................• Nominated Agent (adviser/consultant):

...........................................................................................................................• Agent Reference No.: ...........................................................................................................................• No. of Farms Included in the Partnership: ..........................................................................................• Farm Partnership Tax Reference Number:

...........................................................................................................................• Farm Partnership Bank A/C Name & Number (IBAN & BIC):

.....................................................................................................

• PART II First Partners Details

• Name: ...........................................................................................................................

• Address: ..........................................................................................................................

• Date of Birth: ..........................................................................................................................

• PPSN: ..........................................................................................................................

• Herd Number or other Department Reference No..............................................................................

• Category of Partner (please see Requirements for Registering of Farm Partnerships):

• (i) (ii) Other

• Farm Enterprise of Partner (e.g. Dairy, Tillage etc..): .........................................................................

• % of Profit Share as per Farm Partnership agreement: .............................................................................

• Total Area of Land committed to partnership in Hectares:

• Owned............ Leased ......................Rented.....................

•

• If you are a Category (ii) Partner please confirm details below also:

• Appropriate Qualification: .................................................................................................................

Checklist for Registration of Farm Partnership

In completing your partnership application form it is necessary to forward thefollowing documentation to the Farm Partnership Registration Office. Pleaseuse the checklist below to ensure you have included all the required details.

–

– Completed Application Form

– Completed Bank Details/ Send mandate to Credit Control Office in Cavan

– A signed copy of the Partnership Agreement

– Proof of off-farm income for Category II Partners who have reached their41st birthday.

– Copy of Folio of all owned lands

– Copy of leases for all lands leased in

– Evidence of agricultural qualifications for Category II partners.

• Check our Customer Client System (CCS) to establish if all partners’ namesare linked to the Herd number role

• Assign Farm Partnership Registration Number (FPRN) – enter it and primaryparticipant details on CCS

• Issue Certificate

• Email application for Collaborative Farming Grant scheme

• FPRN: LFP00999

• All MPPS are being assessed in the context of the new legislation and will becontacted in relation to updating forms and the Partnership Agreements

Collaborative Farming Grant Scheme

• ‘Brand new’ Farm Partnerships who have been placed on the Register of FarmPartnerships.

• It involves a contribution of 50 % towards the vouched legal, accounting and advisorycosts incurred in forming the farm partnership, up to a max of €2,500 per partnership(i.e. costs of €5,000).

• Payments under Tranche 1 are being finalised with the aim of paying in earlyDec. Tranche 2 will relate to farm partnerships placed on the Register during theperiod 1 July 2015 to 31 December 2015 and will be communicated with towards endJanuary.

• Huge variation in applications received.

Thank You