Tired of having a big AgriStability or AgriInvest bill from your accountant? Have you wondered if there is anything you can do to reduce the bill?
These programs are complex and it can be difficult to know how to organize your information for your accountant.
Luckily, there are some simple ways to improve the efficiency and accuracy of completing your filings. This includes breaking out farm income and expense items clearly in your accounting records, according to the requirements of each program.
The AgriStability and AgriInvest programs categorize income and expenses as either allowable or non-allowable. This means that an item is either allowed in the calculation of your margin and contributes to the match-able deposit or not.
Structuring your farm records with more detail (more focused account organization) can help:
- It can reduce the time it takes your accountant to prepare your filings.
- It can improve the accuracy of your filings to increase the benefit you receive.
- It can provide greater insight into the financial performance of your farm.
Here are five tips for improving your farm records based on common issues we encounter:
- Record rebates you have received on chemical and fertilizer purchases into a separate income account. These rebates are treated differently than other forms of income.
- Ensure that you are not combining custom feeding income together with feed sales or other custom work income because these are treated differently.
- Record wages paid to family members or other related parties in a separate wage expense account than wages to unrelated people. Non-arm’s length wages (paid to family members) are non-allowable for the calculations.
- Ensure that you are distinguishing between prepared feed and commodity feed purchases in your records by tracking them in separate accounts. Although both categories of feed are allowable, they are treated differently in the calculation of margins and benefits.
- Record crop and hail insurance proceeds and premiums separately from other types of insurance, such as property or vehicle insurance.
Supplemental information forms are by far the most challenging piece of the AgriStability filing for many people.
Commodity prices are checked for reasonability and this is where many of the questions arise during the review. The supplemental forms provide a story of the activity on the farm, which includes crop and livestock production, as well as sales and purchases during the entire year, all of which tie back to the inventory on hand at the beginning and end of the fiscal year. The easiest way to accumulate the information required for the supplemental forms is to keep a running total of inventory produced, purchased and sold throughout the year.
How you organize your accounts can make a huge difference for your accountant preparing your AgriStability and AgriInvest filings.
Apply these tips to your record keeping and watch the number of questions from your accountants decrease as they prepare your AgriStability or AgriInvest program forms. If you want more information on this topic, check out the Farming Income and the AgriStability and AgriInvest Programs Guide on Canada Revenue’s website, or contact a professional.
Colin Miller is a chartered accountant and partner with KPMG’s tax practice in Lethbridge. Contact: firstname.lastname@example.org.