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General Accounting

 

October 4, 2012 - Agri-stability cuts should not go unnoticed - Always read the fine print. I almost missed something buried in it.  I had heard that the federal and provincial governments were going to remove the middle stabilization tier (85 to 70 percent) in the coming Growing Forward 2.

 

July 26, 2012 - Get tax free pay from capital dividend account - The capital dividend account is a notional account used solely for tax purposes.  It does not appear on your company’s balance sheet but will be reported on your corporate tax return, either on your corporate tax summary or capital dividend continuity. Non-taxable capital dividends may be paid from this account.

 

February 2, 2012 - Shareholder loan account makes a good retirement tool - Farming corporations have been a growing phenomenon on the Prairies. Lured by the low corporate tax rate on the first $500,000 of taxable farm­ing income, farmers have been quick to transfer machinery, equip­ment and commodity ownership to a corporate entity while keeping their farmland in their personal names.

 

December 22, 2011 - Buy land in or out of corporation? - Most farmland is held outside of the company because individually owned farm­land is eligible for the capital gains exemption. However, three of my firm’s corpo­rate farmers have moved contrary to the herd in the past month by using their corporations to buy adjoining farmland.

 

September 8, 2011 - When it comes to combine header, is bigger really better? - We’ve all heard the saying, “go big or go home.” It has been a constant in the agri­cultural industry over the past two decades and it is now being played out by farm manufacturers in the combine header market.

 

May 26, 2011 - Consider paying hired help with Tax-free dollars - A tight rural labour market has forced farmers to reach out to urban centers to meet their labour needs. So far, it’s been working.   Prairie farmers are hiring retirees, relatives and youth from the cities in record numbers to help seed and harvest their crops. These new work­ers are relishing the home-cooked meals, wide-open spaces and farm machine efficiencies.

 

March 17, 2011 - Four common tax errors that will cost you money - This will be my 24th tax season.  Things have changed con­siderably since my early days, most specifically with the wide-spread use of computerized farm recordkeeping, but I continue to see common errors...

 

February 17, 2011 - Making tax installments will have you coming up roses - No one enjoys paying their income taxes but farmers are often considered to be particularly tax averse.  They would much rather buy farm inputs or equipment in hopes that the resulting tax shield will be sufficient enough to cover off their tax obligations...

 

January 1, 2011 - Options available in using snowmobile for tax deduction - One of my clients called recently to tell me about his new 2011 snowmobile that he had bought for $15,800.It wasn’t long into our conversation when he said how handy this new snow machine would be for monitoring grain stored away from his farmyard, either in bags or in hard-to-get-at bins...

 

July 8, 2010 - GPS guided spray boom controls quickly pay for themselves - While talking with a farmer over lunch, he mentioned how pleased he was with his family’s recent purchase of a sprayer with automatic boom selection controls...

 

March 25, 2010 - Weigh risk, benefit of using inflated machinery trade-in value - Last week, one of our clients bought two new tractors and traded in two used tractors.  The dealer’s trade-in values for the used tractors were considerably higher than what our client had originally paid, which prompted a call to our office.

 

February 18, 2010 - Know your lender's measurement criteria- Know your lender's measurement criteria - "A banker called me to review a farmer’s financial information. He appreciated the additional ratios and other per acre measurements that were attached as a supplementary to the grain farmer’s financial statements..."

 

September 10, 2009 - Implementing a shareholders' agreement - "This past week I met with two unrelated owners of an incorporated business.  They were looking for some guidance in the event of their own death or disability.   How would their shares in the business be valued?  When would this value be paid?  How would the shareholders or the company itself finance these payments?..."

 

July 2, 2009 - Maximizing the value of your farm debt repayments - "Farming is one of the most capital intensive professions on the planet.  Farming with debt or as the old-timers put it “running a blistered farm” is standard practice.   This past month after securing financing for a client, the banker enthusiastically told me that “it'll be the cheapest money the farmer ever borrowed".   With interest rates at record lows, this is the reality and for this reason you should review your farm loans and mortgages to ensure that you are maximizing the value of your farm debt repayments..."

 

February 19, 2009 - Keeping Books and Records - "In January of 2009 my family and I moved to the country with the purchase of an acreage east of Saskatoon.  There is nothing like a pack and a move to learn something about yourself.  For me it was the simple truth that I am not inclined to throw anything away.  This was reinforced to the edge of my sanity when in my last walk-through of our former home, I checked the attic only to discover financial books and records dating back to 1984..."

 

February 28, 2008 - Drought finds Farmer Joe - "I introduced Farmer Joe in my last column.  Joe quit his job as a heavy-equipment mechanic in Calgary to follow his heart back to Saskatchewan to try his luck farming.  Joe bought two quarter sections of farmland from his father's neighbour for $150,000 and agreed to rent two additional quarters for three years at a cash rental price of $30 per acre.  The farmer who rents Joe's parents' land had agreed to direct seed and spray Joe's farm at local custom farming rates..."

 

January 24, 2008 - Is it time to start a farm? - "There is a considerable optimism in the prairie grain sector.  Grain prices have reached historic highs due to growing international demand, tight stocks and new demand from biofuel manufacturers.  As I wrote this article, December 2008 Minneapolis wheat futures, subtracting our local freight and transportation costs of about $1.60 per bu. yielded a forecasted wheat price of $8.08 per bu.  The November 2008 Winnipeg canola futures contract indicated a prices of $12.18 per bu. on our farm.  With these prices, who wouldn't want to be a farmer?  Let me introduce you to Farmer Joe..."

 

October 29, 2007 - Deducting vehicle expenses in your business - "If you use your car in your business it stands to reason that you would be able to deduct the expense related to its business travel.  There are two ways to accomplish this.  First if the vehicle is owned by the company then all of the expenses will be deducted by the company but the employee who uses the vehicle for personal use will have to report a taxable benefit, called a standby charge..."

 

October 4, 2007 - What does it cost to hold back calves - "Several of my firm's clients are considering holding back calves this fall.  They plan to use their feed stocks and facilities to background them for either the feeder or grasser market.  Travis Peardon, a Saskatchewan Agriculture livestock development specialist, has sent me an Excel based software program, called the Break-even Calculator, which measures and forecasts backgrounding costs and profits..."

 

October 19, 2006 - Don't forget the cost of stacking your hay or silage - "Feed and pasture are typically two-thirds of the annual cost of keeping a cow and the winter feed portion is two-thirds of that total.  For this reason ranchers are quick to harvest any surplus forage in the summer months since they know it will be used up later in the winter season.  Stacking hay or silage is the oldest means of storing surplus forage.  While I have outlined baler costs in a previous column, typically the cost of cutting, baling and handling will be close to 50% of the value of the hay or silage..."

 

September 14, 2006 - How to justify buying a heavy truck for the farm - "Patrick Tatchell of Frontier Peterbilt in Saskatoon reports that business is good in farming country.  “We continue to sell mid-to-late-'90s Peterbilts to prairie farmers along with Super B trailers” he said.  "We are selling more units now than we did five years ago”.  Intuitively this makes sense.  In efforts to extract more money from the marketplace, farmers are identifying their customers, building relationships and using heavy trucks and trailers to deliver their products to market on a timely basis..."

 

June 26, 2006 - Remunerating the owner-manager - "We all work hard for our money and at the end of the day nobody wants to over-pay the Tax Man and be left with less than what would normally be required.   For this reason the remuneration of the owner-manger is always a hot-button topic  sure to perk the ears of the entrepreneur who has made money in his company and who is now looking  to receive something in return for his labor, management and invested funds..."

 

January 19, 2006 - Top 10 ways to improve your business in the new year - "In business, the start of each new year brings with it a time to reflect, analyze and act.  If you could relive your past business year, what would you have done differently?  What changes today will bring the most benefits emotionally and physically?  Is the implementation of a new idea tricky?  What is the cost to your business if you don't act?  Here are my top 10 ideas for improving your business results in the coming year..."

 

November 3, 2005 - Financing your farm from a lender's perspective - "In developing credit worthiness, it helps to look at it from the lender's perspective.  With this in mind, I met with two agricultural lenders: Terry LaRocque and Jay Bohrson. Our discussion focused on what has come to be known as the 3 Cs (character, capacity and collateral) and 3 Rs (return, risk and repayment) of lending..."

 

September 22, 2005 - Pure hedges remove risk from the canola bin - "If you think you are too old to learn new ways to market your canola, consider this. My commodity brokers, Alan Day and Ron Styles of Union Securities Ltd. in Saskatoon, fielded a call recently from an 87-year-old farmer looking to reverse the pure hedge that he had set up on his canola earlier in the year.  Simply put, a pure hedge uses the futures market to manage the canola price risk on your farm. Sales are made in the futures market in spring and summer when canola supplies are known, weather for the upcoming production year is unknown and canola prices are rallying or remaining strong..."

 

August 18, 2005 - Celebrating our centennial: what's your farm's history - "My grandfather left Norway at the age of 17 to make a better life for himself in the Americas. In Norway, the younger sons of farm families were prevented from ever acquiring a part of the family farm by the Odel system of law. Norwegian law required the family farm to be passed on to the eldest male heir. This left many of the younger sons with the prospects of simply being a hired man on one of the farms, going to sea as merchant seamen, compulsory military service or finding their dreams in America..."

 

June 27, 2005 - From old to new: replacing your combine - "Effective machinery management is essential in maintaining the profitability of your farm.  With the prospect of a large harvest looming, machinery dealers are describing recent combine sales as brisk.  Terry Deneiko of Saskatoon's Farm & Garden Centre said that the John Deere dealership has sold 19 new combines so far this year..."

 

May 19, 2005 - What are you seeding and why? - "You talk to any farmer at this time of year and it doesn't take long before the conversation turns to spring seeding and crop choices.  Which crop or crop mix will contribute the most dollars to the farm's bottom line?  Is there a Cinderella crop for 2005, one that looks plain in the spring but in the fall is a member of the royal family?  While most crop rotations are finalized well before seeding, it is not uncommon for plans to change over a cup of coffee in the field..."

 

January 27, 2005 - Establishing a farmland cash rental rate - "Farming is and will remain a volume business.  While technological changes have enabled us to farm more acres with fewer people, the small per-acre profit margin has forced farmers to expand their land base to spread their fixed costs over more acres.   The grain farm appears to be going through the same transformation that the pork industry has done in the last 10 years.  Grain farms are getting bigger..."

 

December 16, 2004 - How to farm with a production joint venture - "A number of farmers want to work less without giving up their land and their active farming status.  Others want to expand but not by borrowing excessively to buy land.  The typical solution for these two groups has been a cash rent or a crop share arrangement, but there are downsides.  The landowner exchanges his source of income to rental from farming, which means he is no longer eligible for a farm-status license plate, the new Canadian Agricultural Income Stabilization program and the long list of farm expenses that were available to him on his personal or corporate tax return..."

 

November 4, 2004 - Extended cab owners get good news - "More farmers are buying extended cab trucks because they serve two purposes.  They haul like a pick-up and they have seating capacity for the whole family, like a car.  Tax auditors have made a deliberate point of auditing the purchases of extended cab trucks and the farmer usually gets a reduced claim for the GST input tax credit..."   

 

July 22, 2004 - The cost of making hay while the sun shines - "Haybines and balers are now working hard to put up the required feed on most prairie farms. While all of us would like to own new haying equipment, each farmer should know what this equipment costs on a per acre or per bale basis.   How many hay acres do you need to cut each year to justify a new mower? How many bales do you need to make each year to justify a new baler? When should you consider renting instead of buying?..."

 

November 27, 2003 - Farmers and hockey: more in common than burgers, bread and beer - "I took a tax class in Toronto a few weeks ago and while there, made a stop at the Hockey Hall of Fame.  The highlight for me was to see and touch the Stanley Cup. This trophy is housed at the Hockey Hall of Fame for only part of the year. For the remainder it is in the hands of the NHL team that won it.  While Canada celebrated two Olympic Gold medals in 2002, it has been too long since a Canadian NHL team last won the cup..." 

 

October 16, 2003 - Consider adding time and value to your fall calf crop - "October is the traditional month for marketing a weaned calf. However, with the U.S. border closed to live cattle from Canada, many cow-calf producers are considering backgrounding and finishing their calves to add time and value.  Tim Highmoor, of the Western Beef Development Centre, has developed a Feeding Option Calculator..."

 

July 24, 2003 - Belief beyond the bottom line - "A couple of weekends ago, my family camped in a tent in my uncle's pasture.  We weren't alone. There were 30 other relatives all nestled into the same coulee of trees about 3½ miles north of the yard.  While the food and visit were good..."

 

June 12, 2003 - Justifying a high clearance sprayer - "A couple of weeks ago I sat in a $280,000 high clearance sprayer.  While I have never sat in a monster truck, this must have been pretty close.  The spray booms spanned 30 metres and the engine was rated at 200 horsepower.  From the cab, you definitely got the feeling that you were king of the road.  While the price tag for one of these machines befits a king, there is more than one high clearance sprayer sitting in prairie machine sheds.  Some farmers have been able to justify ownership while others continue to let their local sprayer service do the job for them.  How many acres do you need to spray to buy one of these rigs?..."

 

November 28, 2002 - Provincial crop insurance shows disparity - "I came across a photo in The Western Producer a few weeks ago that got me thinking. At issue was the Canadian Wheat Board's monopoly of wheat and barley sales.  A farmer was photographed wielding a placard that stated there should be "Equal Rights for all Canadian Farmers."  While I do not intend to trivialize the debate over the wheat board's monopoly..."

 

October 17, 2002 - Is your extended cab pick-up really a truck? - "Canada's Income Tax Act requires that individuals and partnerships, as opposed to corporations, must categorize any purchased pick-up truck as either a passenger or motor vehicle.  If your pick-up truck is categorized as a passenger vehicle, you will be able to depreciate it for tax purposes as a business cost up to a maximum in 2001 of $30,000 before the Goods and Services Tax and Provincial Sales Tax.  On your GST return, you can claim a GST input tax credit..."

 

September 5, 2002 - Buying cow-calf pairs makes more sense than custom feeding - "A rancher called recently to ask whether he should consider custom feeding rather than buying more cow-calf pairs. He had found additional green feed, which will cost more than he's ever paid once he gets it home. He wanted to know the best way to put this and other resources to work.  I called Tim Highmoor at the Western Beef Development Centre, who collects cow herd cost-of-production information..."

 

July 25, 2002 - Adding costs can increase profits, sometimes - "Having a good handle on costs is a key attribute of any successful farmer. Does this mean the good farmers avoid costs while the other farmers simply incur them?  No, of course not.  Successful farm managers have the ability to identify those costs..."

 

June 13, 2002 - What to know when selling breeding stock because of drought - "I recently asked a rancher how he, his pasture and his herd were coping with the drought.  He said that while they were all in tough shape, his pasture was taking the worst of it.  He thought that his native grass pasture, while being resilient to drought, was probably over-grazed the year before, which was also a drought year.  Over-grazing this year is not an option.  Feed is too expensive.  The latest price he was quoted..."

 

May 2, 2002 - Comparing options in crop sharing - "The crop share lease has been around for a long time.  In this arrangement the landlord provides the land and pays for a portion of some predetermined inputs in exchange for a share of the harvested crop.  The renter provides the labour, machinery and the major portion of the operating expenses in exchange for a share of the harvested crop. Typically, seed, chemicals and fertilizer are examples of the predetermined inputs that are shared..."

 

February 7, 2002 - Farm income forecast provides several lessons - "Agriculture Canada recently revised its 2001 farm income forecast.  The report shows that Canadian farm income in 2001 increased in comparison to the previous five-year average. Details of this revised forecast are illustrated in table one. In table two..."

 

January 10, 2002 - Farmers don't deserve stereotypical labels from their advisors - "At the end of December, a colleague and I met with three bank lending teams. We were asked to talk about our accountant-client relationship and to explain the various accounting reports that are attached to the front of our clients' financial statements.  In short, bankers look to us in the accounting profession to ensure that the financial information that crosses their desks is reliable and objective. To do this..."

 

November 22, 2001 - Costing benchmark helps feedlots manage their business - "This fall, I was fortunate to meet a young farmer who had begun backgrounding calves.  While he knew his costs, he was hoping to internalize a costing benchmark that would help him manage his business.  Using the cost-per-head-per-day concept first introduced by Donald Fedie in How to Farm for Profit, published by Iowa State University Press, I think we found what he is looking for..."

 

August 30, 2001 - American farm - bill could affect long term farming profits - "A farming old-timer once told me that when it comes to bad news, "what one farmer doesn't think of, the other usually will."  With this in mind, I had dismissed some of the early speculation surrounding the 2001 U.S. farm bill and the talk that it might expand floor price coverage for U.S.-grown peas, lentils and chickpeas.  We farm in an area that has had some success growing pulses. If we were forced to remove pulses from our cropping rotation because of oversupply and low prices, our farm and others would have to strategically rethink..."

 

July 26, 2001 - Manage drought with insurance, cost control, cash flow - "The Saskatchewan and Alberta agriculture departments have added drought watch sections to their websites. Their purpose is "to assist producers with decisions about coping with the dry conditions." I checked them out at www.agr.gov.sk.ca and www.agric.gov.ab.ca  The most intriguing part of the sites was..."

 

June 7, 2001 - Replacing your combine with cows may make economic sense - "We need rain.  I have put in my order for a three-day soaker.  Sounding much like a bad country and western song, although I guess this depends on which side of the feed transaction you're on, "while we wait and watch the skies; feed market prices continue to rise...."

 

April 26, 2001 - Bigger and better versus smaller and smarter - "I have the privilege of listening to some smart people.  One such person rang me up last month and vented over what he perceived as a growing obsession among today's farmers that "bigger alone is better."  In this farmer's circumstances, bigger was no longer better. He said that while he and his neighbor had the same capital to deploy, he was losing ground due to a lack of farm labor.  His neighbor had access to a retired father-in-law and two sons, while he had to make do..."

 

February 1, 2001 - Farmers can't manage what they don't measure - "Farmers are becoming much more sophisticated in tracking and recording business transactions.  In our office, I can not think of one corporate farmer who is not using a computerized computer program.  Farming is a business.  As the Canadian Farm Business Management Council noted in Accounting for Successful Farm Management:  "To remain competitive and meet the pressing demands of today's global agricultural industry, Canadian producers need..."

 

January 11, 2001 - Monitoring costs and profits in a cow-calf operation - "I participated in a conference call last month with a client and his banker regarding a request for partial financing of some cows that were scheduled to be purchased before the calendar year end.  The banker's response was swift and immediate.  "We have no problems with cows.  Go out and write your cheque..."

 

October 5, 2000 - Knowing where cash goes helps in making a profit - "One of my favorite stories from last year involved a farmer friend  who managed to surprise reporters at the Saskatchewan Legislature in Regina.   My friend, who is progressive and successful, had been asked to speak to an agriculture-related committee on the perils of farming. On his way out of the building a group of reporters asked him for his views..."

 

June 22, 2000 - What to do when it's too windy to spray - "You were up early to spray.  The plants look better than they should considering all they've been through and the recent rain has helped fade that worst-case scenario.  But the wind has come up so you move down to the home office with your cup of coffee, recalling as you go, the neighbor who has often stated that "farming will never work on paper."  You settle into a chair and you begin to think maybe there is a reason you stayed on the farm and left the desk jobs to your non-farming siblings.  But before your mind wanders off..."

 

June 8, 2000 - Important farming lessons - "When The Western Producer asked me to write something about myself before my first walk in the woods of journalism, I wasn't quite sure where to start.  My farming career began in 1984 when my uncle decided to retire from farming for health reasons.  With no sons of his own, Walter sold me half a section of farmland and agreed to rent to me his remaining land on a crop-share basis.  So at the age of 19..."

 

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Farm Programs

 

March 23, 2006 - CAIS: sticking it out to 2006 - "Federal agriculture minister Chuck Strahl told the Canadian Federation of Agriculture convention on March 2 that the Canadian Agricultural Income Stabilization program will continue to function for the 2006 crop year.  He indicated that "it's simply not possible, nor in the farmer's best interest to scrap CAIS without a proper replacement that's been agreed to by all of us.  "Hearing this news, farmers who devote a tremendous amount of time, energy and money to file their annual CAIS forms gave out monumental sighs..."

 

September 17, 2004 - Maximizing your CAIS benefits - "How lucky will you be when it comes to receiving a 2003 CAIS benefit? As Anne Tyler, the US novelist wrote “People always call it luck when you’ve acted more sensibly than they have.” Even if you have already mailed in your 2003 CAIS Supplementary form or have instructed your accountant to do it for you, it is not too late to use these tips for maximizing your CAIS benefits..."

 

April 8, 2004 - CAIS can influence a decision to rent or custom farm - "I recently met with a farmer who was considering the impact of the Canadian Agricultural Income Stabilization program on his decision to either hire a custom seeder or cash lease his farm this spring..."

 

February 26, 2004 - Does CAIS provide certainty for farmers in uncertain times? - "Farming and ranching have always had their fair share of uncertainty. As a result, any farm program that reduces this uncertainty is welcome. Unfortunately, the launch of the new Canadian Agricultural Income Stabilization program is one year late and has raised suspicions among producers that the only certain thing about CAIS is its uncertainty.  My clients are asking three questions..."

 

September 4, 2003 - CAIS: The newest member of the government league of superheroes -  "I wonder if any of our farm policy makers read comic books.  Beginning in 2003, the Canadian Agriculture Income Stabilization Program, known by its acronym CAIS, will replace the existing Net Income Stabilization Account and Canadian Farm Income Program.  CAIS promises to be the..."

 

March 15, 2001 - NISA: The farmer's first place to save - "By now most of you should have received your Net Income Stabilization Account 2000 forms package.  Fellow Western Producer columnist Ian Morrison advises us to invest between five and 10 percent of our farm's net income outside of agriculture. NISA, which could be considered a super-charged guaranteed income certificate..."

 

July 27, 2000 - Apply for AIDA?  Absolutely - "A communications officer with the Agricultural Income Disaster Assistance administration recently asked why only 9,100 AIDA applications out of the expected 50,000 were now in their Winnipeg offices.  I said if 37,000 applications were filed for the 1998 claim year, then the same and more will be in Winnipeg by Sept. 1, the new deadline.  There are probably many reasons why farmers have waited to send in their AIDA applications..."

 

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Partnerships/Corporations

 

April 3, 2008 - Changing a business from proprietorship to partnership - "While generalizations in tax planning can get you into trouble, I am prepared to make one: “Every non-incorporated farm on the Prairies should be structured as a farm partnership!”  A farm partnership with your spouse or farming child offers up some real tax and estate planning advantages..."

 

March 15, 2007 - The farm partnership - a smarter choice - "More and more farmers and ranchers are choosing to structure their farms as partnerships versus sole proprietorships.  I attended a professional update course where the key-note speaker stated emphatically that every non-incorporated farmer in Western Canada should be farming in a partnership.  Why is the farm partnership a smarter choice?  It gives considerable flexibility in the transfer of inventory..."

 

May 18, 2006 - Incorporate before selling farm - "One of the little-known tax advantages available to farmers lies within the farm partnership.  Typically the $500,000 capital gains exemption is used at the end of a farmer's lifetime when bequesting his farmland to his beneficiaries.  More recently, however, we have seen a growing number of farmers structure their operations into partnerships because farm partnerships qualify for the capital gains exemption. Let me explain..."

 

February 24, 2005 - Is your wife your business partner? - "Off-farm income has become increasingly important to Canadian farms.  With off-farm and farm incomes lumped together on the same personal income tax return, farm taxpayers are quick to structure their farm businesses in such a way as to ensure the optimum split of the reported farm income or loss..."

 

August 12, 2004 - Deferring tax through a farm company - "For some of you, the prospects of a decent crop along with old crop deferrals may be causing you to reconsider the option of incorporating in order to defer tax. In our office we are often asked to quantify the tax deferral benefits in order to more clearly communicate the potential benefits of incorporation..."

 

February 6, 2003 - Examining options in a succession plan - "In my January 9, 2003 column I concluded that determining expectations is the first step in a farm succession plan. This column will examine some of the options available to farm families considering passing the farm to the next generation.  Examining options is best viewed as creative problem solving..." 

 

January 9, 2003 - Determining expectations first step in farm succession - "Passing the farm to the next generation is six parts emotion, three parts communication, one-half part process and one-half part technical support.  It is not an event, one person's problem or something to be left solely in the hands of a lawyer or accountant.  It is natural for the farmer who is leaving to experience a sense of loss. He chose farming, met the challenges head-on and achieved success by doing things his way.  A farm succession plan implies change..." 

 

October 11, 2001 - Farm incorporation has advantages and disadvantages - "In law, a corporation is an artificial person having an independent existence, separate and distinct from that of its shareholders.  For farm families, the idea of creating an "artificial person" through the incorporation of their family farm isn't too hard to conceptualize.  More than one farm wife has told me that there were three people in their relationship: "him, me and the farm."  Incorporating a farm business has a number of advantages..."

 

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Income Tax

 

June 4, 2009 - Avoiding the Gross Revenue Test - "Farming has always been and remains  a risky business.  In an effort to encourage and reward these risk-takers, the Income Tax Act (ITA)  provides a lifetime $750,000 exemption in respect of capital gains realized on the disposition of qualified farm property..."

 

December 4, 2008 - Canadian Snowbirds soon to be snared by Border Patrol - "This is the time of year when Canadian snowbirds leave  behind  their parkas, snow shovels and winter boots to trek to those warm and pleasant climates of Palm Springs, CA or Phoenix, AZ .  Several of these same snowbirds  may have filing requirements in the United States depending on the number of days spent there each year.   Ignoring these filing requirements are not for the feint of heart with failure to file penalties at  $1,000 per year..."

 

July 17, 2008 - Family trust works as succession planning tool - "A family trust is becoming an increasingly popular way to safeguard assets and split income.  As Saskatoon tax lawyer Beaty Beaubier puts it, "a family trust is for those individuals who want to share wealth but not necessarily control."  A family trust is not a legal entity like a corporation.  However, for income tax purposes, the trust is considered to be an "individual" and must file an annual trust return (Form T3) to the Canada Revenue Agency within 90 days of the trust's fiscal year-end..."

 

June 12, 2008 - Tax free savings account no replacement for RRSP - "How do we choose between a TFSA and an RRSP?  Beginning next year, residents of Canada who are 18 years and older can invest up to $5,000 annually into a Tax-Free Savings Account.  They can carry forward unused contribution room for future use, and if they make withdrawals they can return the money later without penalty.  While contributions won't be tax deductible, all investment earnings will accumulate tax free..."

 

December 13, 2007 - What's new for 2007 personal income taxes! - "To quote Benjamin Franklin, “Certainty? In this world nothing is certain but death and taxes”.  We are soon to arrive at the end of the 2007 calendar year and with it the certainty of income tax filing.  There are some new tax rules which will provide income tax relief to Canadian taxpayers and I thought I’d use this column to highlight those changes which have some definite appeal..."

 

July 26, 2007 - In which province do you principally reside? - "While it appears to be a straight forward question, John Mandrusiak, a chartered accountant and Alberta farmer went all the way to Supreme Court of British Columbia to get it answered.  Mr. Mandrusiak began working in B.C. in 1987 at the new office of the corporation of which he had been an employee, in Alberta, for 25 years, and since 1987 he maintained a home in both provinces.  Mr. Mandrusiak also owned and operated a farm in Alberta since 1978 and since the 2000 tax year he had been assessed as an unrestricted farmer..."

 

June 21, 2007 - Revisiting the principal residence exemption - "If a property qualifies as your principal residence, then you can use the principal residence exemption to reduce or eliminate any capital gain otherwise calculated.   With surging property values in much of Western Canada, anyone considering the sale of their residential farm or acreage properties should revisit their principal residence exemption as a means of minimizing or even eliminating the individual income taxes which might otherwise be calculated on its sale..."

 

January 22, 2007 - Rollovers of farm properties - "During the life of a farmer or at his death, the Income Tax Act allows for a rollover of farmland, depreciable property and eligible capital property (grain condos or quotas), from a farmer to his child without the necessity of realizing accrued gains on the property or any income in the form of recaptured depreciation that might result from a transfer at fair market value..."

 

December 28, 2006 - Re-examining joint ownership in your estate plan - "I am a big fan of the principle called “Ockham’s Razor”.  William of Ockham, a medieval philosopher and thinker claimed that if we have to choose between two competing solutions which appear to generate the same result then it is reasonable and prudent for us to choose the solution which has the simplest form..."

 

June 1, 2006 - In-house health plan can save at tax time - "Business owners are implementing in-house private health services plans, or PHSPs, to retain and reward their employees and to get more bang for their buck when it comes to their own medical expenses.  An in-house or self-administered PHSP is an insurance plan that does not involve the use of an insurance company or trustee, typically on a cost-plus basis.  If an employer enters into a PHSP for an employee, the expenses can be deducted by the employer and are not taxable to the employee..."

 

May 20, 2004 - Tax agency chases farmer with off-farm jobs - "Imagine having a Canada Revenue Agency auditor tell you that you have no reasonable expectation of profit, or REOP, from your farm. As a result you have no source of income for the purpose of claiming income tax deductions under the Income Tax Act.  The auditor says that he has no option but to reassess your last four years of income tax and disallow your farm losses that were previously written off against your off-farm income..."

 

March 20, 2003 - Case law insight into deductible business expenses - "Our courts have had to deal with the issue of deductible expenses since the inception of the Income Tax Act.  Part of the problem is that the act provides a subjective definition of what business and property owners can write off.  Paragraph 18(1)(a) states that any non-capital expense "incurred for the purpose of gaining or producing income" is deductible. Section 67 weighs in on..."

 

December 7, 2000 - Before you celebrate the New Year, review tax plans - "Farmers and ranchers have for years deferred income and pre-bought inputs to defer tax to the subsequent year.  But this year's decision to defer income will yield an additional benefit beyond the usual one-year deferral of tax.  Tax rates are falling in 2001, and income deferred into next year will, in most cases, be taxed at a lower rate.  In Saskatchewan on Jan. 1, 2001, three surtaxes will be eliminated..."

 

October 26, 2000 - Justice to the farmer with off-farm income - "I phoned two of our clients recently and asked them to review the front page of the Sept. 28, 2000 Western Producer.  I was hoping that the headline "Judge rules for farmers; scolds tax department" would give them some comfort..."

 

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