Canada’s tax laws are confusing in and of themselves. If you’re a Canadian farmer, it can be even more difficult. That’s because there are specific tax obligations that relate only to Canadian farm businesses.
Farm Income Tax Basics
For income tax purposes, in Canada, farming income is money that comes in from:
- Raising and showing livestock
- Soil tiling
- Racehorse maintenance
- Raising poultry
- Dairy farming
- Tree farming
- Fruit farming
- Fur farming
- Operating a feedlot
- Other related activities
Most Canadian farm businesses are unincorporated or are partnerships and are therefore subject to personal income tax on their earnings.
There are a lot of benefits to running an unincorporated farming business, such as being able to take advantage of capital gains exemptions and a somewhat easier way of reporting farm income.
Reporting Farm Income and Expenses
If you have farming income (or losses) you need to report this to the Canada Revenue Agency (CRA).
How you report farm income though depends on many factors, including where you live, if you participate in farm support programs, and how the farm business is structured.
For example, if you are a farmer you would report your income as if you're self-employed or operate a small business, detailing farming income, losses, and expenses.
The kind of form you use though could change, depending on where you live or if you participate in the AgriStability or AgriInvest programs.
How you file your taxes will also change depending on whether you run it as a self-employed business owner or a partnership.
Remembering Important Farm Tax Dates
Operating a farm is, when it comes to actually paying taxes, just like any other business. There are important tax filing deadlines, paperwork, and payments you need to keep track of.
While most individuals have to pay their tax installments for 2017 on March 15, June 15, September 15, and December 15, the rules are different for farmers and fishers.
If your main source of income is self-employment income from farming or fishing, you only make one instalment payment annually. You should receive an installment reminder in November and you need to make the payment by December 31 of this year.
Payment dates for Goods and Services Tax/Harmonized Sales Tax (GST/HST) are:
- April 5
- July 5
- October 5
- January 5
FBC, Helping Farmers Understand Their Tax Obligations
There are a lot of different rules, regulations, and exceptions when it comes to farm tax and tax planning; that’s why it’s a good idea to retain the services of a tax professional like FBC.
Why FBC? FBC has worked exclusively with farmers and small business owners and farmers since 1952. Since then, we have helped tens of thousands of Canadian farmers and small business owners minimize their tax burden and maximize their assets.
At FBC, we understand that everyone’s accounting and tax needs are unique. That’s why we’re the only firm in Canada to offer an integrated tax services on a year-round Membership basis.
For a fixed fee, Members get access to our tax planning, tax preparation, consultation, bookkeeping, and financial planning services. FBC also provides all new Members with a review of their previous 3 years’ tax returns.
For more information on FBC and the services we offer, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.