As one of the oldest and most time-tested professions known to man, it's little wonder why farming continues to be among the most common professions in Canada.
After all, in what other line of work can you get in touch with the beauties of agrarian countryside while making a successful living off of the miracles of Mother Nature?
But there are other financial benefits to farming that producers can take advantage of during tax season. The following 3 tips can help you get most back in taxes when it's time to report your earnings to the government.
1. Prove Farm is a Business, Not a Hobby
You may have some land, a tractor and a barn, but if you want to get some tax breaks from the government, you'll need to establish that your farm is a business, not merely a hobby.
The best way of going about this is by showing that you earn a profit.
For example, if you could show to the government that you took in more money than you spent, you should be able to get tax breaks on various purchases made for your business.
2. Check for Potential Property Tax Incentives
The more land that a farmer has, the more room there is to make a tidy profit from the crops grown. However, in order to get property tax breaks, you may have to pass certain benchmarks.
For instance, some farm property tax breaks only come if growers are able to show they produced a certain amount of sales over several years. Acreage may play into it as well.
3. Account for Items Purchased for Resale
The average local consumer has a wide variety of tastes for various fruits and vegetables. Due to resources, though, farmers may not be able to grow everything that their customers want on their own property.
To accommodate, producers may patronize another local vendor where they can buy wholesale and resell product at retail prices
Make sure you record how much you spend on resale items, because you may be able to claim them as a tax deduction.
For more underutilized tax breaks that can save you and your business money, talk to an FBC farm tax specialist.