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July 17, 2024 by Deanna Cregg

The difference between expenses and capital expenditures

The tax implications of expenses and capital assets are quite different, so it’s important farm businesses understand these implications before making a significant investment in new assets or renovations. Unfortunately, the difference is not always clear. When a farm business spends money on a project that is deemed a repair, this can be deducted in the current tax year as an expense. However, if money is spent on a capital improvement, that gets added to the cost of the asset, which is then depreciated over time. In other words, rather than get the full benefit of the deduction in the year the investment is made, businesses see this benefit gradually, over a number of years, depending on the class of the asset and the depreciation rate. That is the fundamental difference between expenses and capital expenditures.

May 30, 2024 by Candice McKay

Data, AI and other tech revolutionizing the farm industry

Today’s farming businesses are facing unique challenges, but there are exciting new tools at their disposal that offer new possibilities. These tools are getting more sophisticated every day. By simply tracking recent trends in the agriculture industry, we can start to get a sense of where the sector is likely to go next. One fact seems undeniable: data and artificial intelligence (AI) are here to stay. Both are essential tools that can transform any farm’s sense of what is possible. In this article, we’ll take a closer look at how high‑tech tools are revolutionizing the farm industry.

January 26, 2024 by Ryan Kitchen

Crop corporation: A solution for excess inventory

The work of grain producers is very cyclical. You could have a good year, followed by a not‑so‑good year, followed by a really great year, followed by a disaster year. Over time, this might even out, but what happens when you have a number of good years in a row?

December 18, 2023 by Bud Arnold

Pick the right structure for your farmhouse

When purchasing a farm, sometimes the property includes a house for the farm family to use as their primary residence. Families in this position often overlook the tax complications of buying a farmhouse that is part of their farm property, but how they decide to hold that farmhouse could significantly impact their tax obligations. This article outlines several farm business structures and the farmhouse tax obligations in each case.

December 6, 2023 by Luther VanGilst

The end of immediate expensing

When the immediate expensing rules were introduced in 2021, they allowed incorporated businesses to start fully expensing purchases, claiming up to $1.5 million in tax depreciation on eligible property acquired annually. This applies to a broad range of purchases, including tractors, combines, planters, cultivators and processing equipment ⁠–⁠ almost everything in a farm context except buildings, paving and quota ⁠–⁠ but corporations will no longer be able to access this opportunity in 2024.

November 29, 2023 by Thomas Blonde

Saving for retirement on the farm

Given the all-consuming complexity of any farm business, it’s not uncommon for farmers to overlook the importance of retirement planning. The constant need to reinvest in these businesses means there’s rarely a good time to think about saving for the future. 

December 9, 2022 by Chris Alexander

Self-assessment of GST/HST collected on the sale of real property

The Excise Tax Act (ETA) outlines specific rules regarding the reporting of GST/HST collected on sales of real property used in commercial activity. The ETA requires self‑assessment of GST/HST payable on a transaction by the purchaser, rather than collection and remittance by the vendor. Instead of immediately remitting the GST/HST to the vendor, the buyer is required to declare GST/HST collected and GST/HST paid (if the expense is eligible for an input tax credit) on their own return.

August 24, 2022 by Candice McKay

Why farm businesses should move into the cloud

Over the past 10 years, we have seen a great deal of consolidation among agribusinesses. As these businesses grow and accumulate debt, doing the bookkeeping and accounting at the kitchen table is no longer viable. By introducing cloud-based accounting, these businesses are better positioned to address complex reporting requirements.

June 17, 2022 by Bud Arnold

Structuring a farm business to involve the next generation

If you’re thinking about farm succession planning, there are many areas to consider. One key consideration is determining how to include the next generation in the structure of a farm business while the parents are still involved. If you plan to include more than one generation at the same time, there are several ways you can include a child or successor as a partial owner.

April 28, 2022 by Luther VanGilst

Navigating the new Canadian carbon tax credit

There are currently four Canadian provinces that do not have a provincial carbon tax: Alberta, Manitoba, Ontario and Saskatchewan. As a result, their carbon use is taxed on a federal level. In these provinces, farmers generally do not pay carbon tax on diesel and gas used for farm equipment or farm vehicles, but they do pay carbon tax on the propane and natural gas they use.

August 23, 2021 by Bud Arnold

The rules of family farm transitions are changing

When selling a farm corporation, there are tax advantages to selling to a stranger than to someone in your own family. It has always been difficult to transition corporate-owned farms to the next generation, because the sale of a corporation within a family is taxed at a punitive rate – one that would be lower if the buyer was an unrelated person.

July 14, 2021 by Thomas Blonde

Four reasons to consider renting farmland

The advantages of buying property are well known to most farmers. It is a great way to build equity in your business and it usually grows in value over time. In addition, owning farmland offers more tax planning options down the road, allows you to avoid rent increases, gives you more freedom in the way you use the land and protects you from losing access to the land, in the event your landlord decides to sell the land or rent to someone else. However, in spite of all these advantages, there are also several reasons it might be preferable to rent farmland.

June 28, 2021 by Luther VanGilst

New tax savings for farmers buying capital assets

Farmers who are thinking of buying a major capital asset like machinery or equipment may soon see significant tax savings. In the 2021 federal budget, important changes were proposed to the capital cost allowance rules. Before these changes were introduced, capital assets were depreciated according to their class. For example, if a farmer purchased a Class 10 tractor or combine, the capital cost allowance on that asset in the year of purchase was 45 per cent. However, the new rules no longer organize assets by class, instead allowing farmers to fully expense capital assets up to $1.5 million in the year of purchase. 

June 17, 2021 by Luc Joye

The drawbacks of deferring taxes

Most businesses must pay taxes on all income, including accounts receivable and inventory in the year they are created. However, farm businesses are one of the few exceptions, as they are permitted to pay taxes on a cash basis. As a result, they have the unique ability to deduct prepaid expenses and push income into future years. Rather than pay tax on inventory, they can wait until this inventory has been sold. While most farmers prefer to take advantage of this deferral opportunity, this is not always the best option.

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.