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February 18, 2021 by Thomas Blonde

How to maximize tax benefits for farm vehicles

While many of the vehicles purchased by farm businesses – such as tractors and other farm machinery – are used exclusively for business purposes, some road-going vehicles (i.e., pick-up trucks, vans) can also be used outside the farm business, which causes complications from a tax perspective. 

December 17, 2020 by Denver Nicklas

Four steps farm businesses can take to minimize the impact of COVID-19

Over the course of the COVID-19 pandemic, farmers have faced a number of significant challenges. With most restaurants operating at diminished capacity or closed outright, the demand for many farm products has decreased. This leaves producers with excess inventory, some of which they have been forced to destroy. Meanwhile, farm businesses in the fruit and vegetable sector have incurred new costs as they modify equipment to keep employees separated by at least two metres, the distance now recommended by Health Canada. Furthermore, many processing plants have invested in barriers and additional space on the line to keep employees separated.

November 4, 2020 by Thomas Blonde

Introducing the Emergency On-Farm Support Fund

Margins are relatively tight in the farming industry and some farmers do not have the financial wherewithal to fully protect their employees from COVID-19. This is a major concern, as farm workers often find themselves living in close quarters, which makes social distancing extremely difficult. 

October 21, 2020 by Helen Orok

Are new capital assets really a wise investment?

Many farmers purchase capital assets in an effort to keep their tax bill to a minimum, as they believe the purchase of a new tractor or other piece of equipment is a good way to reduce their tax liability. However, in some cases, the immediate tax benefits are relatively minor – and purchasing the asset can result in other issues such as cash flow problems. If your corporation purchases a capital asset, the prescribed capital cost deduction available will reduce your tax liability by the corporate tax rate (11 to 31 per cent, depending on your province). While it’s tempting to try to minimize tax, there are several other questions you should ask before investing in a capital asset.

July 28, 2020 by Luc Joye

The benefits of starting a single purpose land corporation

Purchasing land is a common activity in any farm business, but these transactions can be handled in several different ways. For a farm business operating as a corporation, the most common approach is to purchase land within the existing corporation. While this isn’t necessarily a problematic approach, it places all the business’s assets within a single corporation, which limits your flexibility in the future, particularly during the succession process. While you may want to distribute your business’s assets among several children, if the assets are all within a single corporation, you will only be permitted to distribute shares without significant restructuring.

June 10, 2020 by Marla Bilokreli

How rental farm property qualifies for the capital gains exemption

If you inherit a piece of farm property and continue the farming activity on that land, you should qualify for the capital gains exemption when you go to sell. However, even if you choose to rent out that property – rather than farm it yourself – you could still qualify if the land you inherit is from a spouse, common-law partner, child or parent (for the purposes of this article, any member of these groups will be referred to as a “family member”).

May 13, 2020 by Ryan Kitchen

The pros and cons of being classified as a hobby farmer

A full-time farmer gets into the business of farming with the reasonable expectation of profit. When they compile their tax returns, they report all their farm revenue and have the ability to deduct relevant expenses against any revenue on their tax return. Someone who has a farming business on the side with a regular source of income outside the farm would be considered a part-time farmer. In these cases, reporting the farm as a business could be advantageous because the expenses related to the farm might be higher than the income and these losses can be applied against other sources of income, lowering the taxpayer’s liability. In addition to these two options, there is a third classification that presents a different set of advantages and limitations: hobby farming.

December 17, 2019 by Rosa Maria Iuliano

Five tips for improved GST documentation

If your business is registered for GST, you can claim input tax credits under certain conditions. For one, you can recover any GST you pay on purchases and expenses that relate to your commercial activities. If a parent or sister company makes a payment on your behalf and it’s connected to your activity, you should be able to claim an input tax credit – as long as your name is on the transaction. If someone else’s name is on the transaction, the CRA has no way to confirm it’s yours (there’s also the danger that more than one entity could claim an input tax credit on the same transaction). With that in mind, here are five steps you can take to avoid improper GST documentation.

November 6, 2019 by Denver Nicklas

Farmers facing an increase in HST examinations

Over the past 12 to 18 months, Canadian farmers have been subjected to a significant increase in HST examinations from the Canada Revenue Agency (CRA). There has always been the potential for close scrutiny, but the instances of this have increased due to an overall change in the CRA’s approach in recent months. While the agency still conducts full-blown audits, it has shown a growing preference for more targeted work. Rather than go to the trouble of sending someone to do an inspection in person, the CRA can look at HST data and quickly determine whether something has been missed or over-claimed. As a result of these examinations, many farmers have had to pay back HST or collect it where they did not in the past. With that in mind, it is important for farmers to know what the CRA is looking for and where it is finding the most costly errors.

October 2, 2019 by Luther VanGilst

Four TOSI exceptions available to farmers

Before new legislation was introduced in 2017 (effective January 2018), tax on split income (TOSI) only applied to minors. Previously, if private corporation dividend income was allocated to someone under the age of 18, that income would be taxed at the highest marginal tax rate. (This is currently 33 per cent federally, with combined federal and provincial/territorial rates ranging from 47.5 per cent to 54 per cent on regular income). 

August 20, 2019 by Dan Roberts

Five key considerations for Canadians selling to Americans online

Due to the rise of online sales through the likes of Amazon and eBay, a number of Canadians are looking into selling goods online to consumers who live in the United States. Setting up an online business is a great way to supplement your primary income stream, but even if your business is a relatively small undertaking, there are several issues to consider. With that in mind, here are five key considerations for Canadians selling to Americans online.

August 7, 2019 by Luc Joye

Purifying your farm corporation

Purified farm corporations have access to some major tax advantages, including the lifetime capital gains exemption and the ability to transfer assets to the next generation at cost. In order to qualify for these opportunities, 90 per cent of your farm corporation’s assets need to be active farming assets. If non-farming assets exceed 10 per cent, you will no longer qualify unless you remove some of these assets. This article will take a closer look at the tax opportunities available to purified farming corporations and the steps you can take to ensure you have access to them.

July 9, 2019 by Kari Viglasky

Eight tips to retain employees

Retaining employees is the most important challenge facing companies today. For one, the birth rate is declining in North America. On average, Canadian families are having 1.2 children per couple versus 4.6 back in the ’60s.

July 8, 2019 by Thomas Blonde

The new rules surrounding capital cost allowance

In your farming business, you are likely to acquire depreciable property such as buildings or equipment. Since this property wears out or becomes obsolete over time, you can deduct the cost of each item over a period of several years in an annual deduction known as the capital cost allowance (CCA). For example, before recent changes to the rules, you would receive half of the 30 per cent CCA in the first year after purchasing a Class 10 asset (e.g., a self-propelled vehicle). If you bought a tractor that cost $100,000, you would receive a $15,000 write-off in the first year. In subsequent years, that 15 per cent would increase to 30 per cent of the remaining balance.

June 11, 2019 by Ryan Kitchen

Capitalizing on the AgriStability deadline extension

Traditionally, farmers had to sign up in order to participate in the AgriStability program by April 30 (just prior to seeding). The program is designed in such a way that you have to sign up and pay your fees before your production season begins to be declared eligible for the upcoming year. However, the government recently announced a one-time extension of the deadline from April 30 to July 2, 2019.

May 7, 2019 by Sameer Noormohamed

New QST obligations for non-residents of Quebec

Until recently, businesses were not required to register for QST unless they were deemed to be carrying on business in Quebec. The carrying on business test considers whether you have a significant presence – such as an office, employees or inventory – in the province. Businesses with a presence in Quebec that make taxable supplies in the province would be required to register, but most vendors selling through e-commerce platforms such as Amazon and eBay may not meet the criteria of having a presence, as they may not have offices, employees or inventory there.