There’s something so refreshing about entering a farm market. The smell of fresh herbs and the varying colourful vegetables everywhere. Canadians are truly blessed to have such a variety of food producers providing us options and the fresh ingredients that we use daily to create delicious food. As a farming business—there are tax breaks and programs that the Government of Canada has in place to help keep farms viable—thriving for the years to come.
Do you currently run a farming business? If so, here are some tax breaks that you should be aware of for the upcoming year:
Claiming special deductions that most small businesses cannot
Farming is a business after all. So much like other businesses, farmers are eligible to deduct all the usual business expenses from their business income. From farmhouse and equipment reasons to vehicle mileage, rental, and meals, farming businesses can claim these deductions.
However, farming businesses also have access to far many more tax breaks—ones that other businesses cannot.
- Cost of fertilizers, lime, veterinary, medicine
- Breeding fees
- Fence repairs
- Interest on loans
- Amount of deductible premiums to the crop insurance program
Capital gains advantages
Capital gains are another area that farming businesses can receive tax breaks from the Canadian government.
Did you know that all taxpayers in Canada are entitled to realize $750,000 of capital gains tax-free on qualifying farm property during their lifetime? Real property, quota used in a farming business, shares in a family farm corporation, and an interest in a family farm partnership are all also included when qualifying farm property.
There is a catch though. You can only receive these tax breaks listed above if you qualify as a a “full-time farmer.” In other words, you have been an individual who is operating a farm as a business in the expectation of profit. Hobbies or side farming businesses don’t count!
Full-time farmers also have a leg up over other businesses in Canada. There is no limit on the amount of losses that are deductible, and these losses can be deduced from all your income from all sources—and carried back for three years or carried forward for up to 20 years.
Take advantage of these tax breaks for next year—today!
Now you’re armed with all the right information and set to tackle your taxes for next year! Although it takes a little bit of digging, reading, and researching, farming businesses can truly benefit from the tax breaks provided to them in Canada. If you’re looking for a way to keep up-to-date on your farming business’ cash flow, be sure to give Kashoo’s 14-day free trial a go to see how you can be even more prepared for tax season next year!