As farming is gaining prominence and more and more people are realizing the value of farming as a source of income and as a career its important to note that farming is a business and is recognized by the law as a trade.
What is a farmer?
For tax purposes a farmer is any person who derives income from pastoral/agricultural or other farming activities, including any person who derives income from the letting of a farm used for such purposes. [Section 2(1) of the Income Tax Act] In terms of the law, such person is liable to pay tax. However not to fear, the tax laws are very soft towards farmers as they seek to promote farming in the country.
If you are a farmer as defined you must register with the Zimbabwe Revenue Authority (ZIMRA) and pay your taxes in terms of the Act.
what are the tax obligations of a farmer Obligations of a farmer?
- Registering for Income Tax ,PAYE and VAT as and when you become liable to register
- Keeping accurate records of transactions;
- Retaining records for up to 6 years
- Remitting taxes by the due dates;
- Submitting tax returns by the due dates;
- Furnishing information as requested by Zimbabwe Revenue Authority (ZIMRA
As mentioned earlier, the government is always seeking to promote agriculture. This is also evident in the tax laws passed which seek to promote farmers. Did you know that farmers have special deductions in terms of section 15 (2) (z) As read with paragraph 2 of the 7th Schedule of the Income tax Act? . These are specifically meant to make sure that the tax paid by farmers is minimized.
what are the special tax deductions for farmers?
- Costs incurred in works for the prevention of soil erosion (planting of trees, ridging, etc.)
- Any water conservation works
- The stumping and clearing of land for farming purposes.
- The sinking of boreholes and wells
- Aerial and geophysical surveys.
- Fencing used in farming operations.
Farming is also a business and like any other business, there are tax issues. Let us take care of the tax aspects of your farming business and you can focus on your farming. Contact us for more information.