Who doesn’t want an immediate writeoff? Unfortunately, Canada Revenue Agency classifies business expenses into two categories: current and capital expenses. Current expenses give rise to an immediate writeoff while capital expenses do not. Capital expenses are for depreciable assets and are written off over a period of years. The number of years depends on the […] Read more
Stories by Grant Diamond
Revenue received from oil company leases is taxable
Despite the precipitous decline in oil prices, or maybe because of it, farmers are increasingly being approached by oil companies for access to their properties for exploration of oil and natural gas resources. Although Alberta and Saskatchewan farmers have had longtime experience with this issue, Manitoba farmers are seeing a significant increase in approaches from […] Read more
Timing capital purchases can reduce tax bill
An expense is deductible when calculating income from a business for tax purposes if it is made to earn business income in a particular tax year. However, capital expenses are treated a little differently because they usually provide an ongoing benefit and contribute to income generation in future years as well. As a result, most […] Read more
I’ll trade you these for two of those …
Bartering is alive and well on the farm and in business everywhere. It also continues to have the attention of the Canada Revenue Agency, which maintains the practice is covered by the rules and regulations of the Income Tax Act. Trading by exchanging one commodity for another may not involve the exchange of money, but […] Read more
Start young to build RRSP and tax-free savings
The annual rush to deposit the full contribution limit into a Registered Retirement Savings Plan is over for the year, but perhaps there is a better way to make this investment. One option is to get a head start on next year by starting regular payments now and watch funds grow compounded over a longer […] Read more
Farms and families should take note of federal tax changes
The federal government has introduced some tax changes for the 2014 tax year. The lifetime capital gains exemption for dispositions after 2013 of qualified small business corporation shares and qualified farm and fishing property has increased to $800,000 from $750,000 the previous year. Reserves produced in the current year as a result of the above […] Read more
Retirement strategy developed in advance can save tax, fees
It is always better to start planning an exit strategy as soon as possible when considering retiring from farming. This will provide options for withdrawing funds from the business over a number of years and hopefully reduce the tax burden. For instance, farmers who are thinking about retiring and selling off their shares or assets […] Read more
Retiring allowances can offer tax shelters, deferrals
A retiring allowance for long-tenured officers or employees of a corporation is a standard element of compensation packages in Canada. Credit for unused sick leave may also be included in the amount. However, retiring allowances don’t include pension benefits, vacation pay, salary, wages, bonuses, overtime or wages in lieu of termination notice. The allowance is […] Read more
Maximize capital gains exemption
Taking advantage of capital gains deductions associated with the selling of qualified farm property might be an appealing way for farmers to reduce their tax bills on such sales. However, the calculations surrounding these deductions are so complicated and detailed that farmers might get a lot less than they bargained for, including reduced benefit from […] Read more
Flow-through shares a tax option
Manitoba and Saskatchewan both saw reduced seeded acreage this year because of excess moisture problems Both provincial governments are looking at assistance programs, but many farmers say they never got a penny from similar flood damage in 2011. Crop insurance isn’t much help either because it applies only if the producer seeds a crop. However, […] Read more
