+ Reply to Thread
Results 1 to 3 of 3

Thread: Tax stuff: restricted farm losses

  1. #1
    Dennis Lapierre
    Join Date
    Dec 2009
    Location
    Falkland, BC
    Posts
    275
    Blog Entries
    13

    Tax stuff: restricted farm losses

    This applies particularly to farms that rely on off-farm income to stay afloat.

    The Canadian Federation of Agriculture (CFA), to which the BCAC belongs, is our federal lobbying counterpart. Agriculture is a shared federal-provincial responsibility, remember? The BCAC, along with all other equivalent general farm organizations in Canada work together to influence federal policy that applies to federal matters.

    The CFA intends to seek a change in the amount of allowed restricted farm losses...to increase the amount. For those of us who don't quite understand what this means, this site might help explain: http://www.advicetobiz.com/pdfs/Farm...and_Losses.pdf

    The question I'm being asked by one of the CFA staff is..."are there examples were the current restrictions are inadequate". The assumption is that small farms and farms needing off-farm income are not benefiting as much as they should be because of this taxation rule.

    The CFA will vote on this initiative in June. If you can provide me an example it can use to help make its case, that would be helpful.

  2. #2
    Dennis Lapierre
    Join Date
    Dec 2009
    Location
    Falkland, BC
    Posts
    275
    Blog Entries
    13

    The following is an excerpt from the CFA news release on the federal budget. There were a couple of small wins for the small farmer:

    Taxation

    - CFA was pleased to see the increase of $50,000 to the Lifetime Capital Gains Exemption - an important tool for helping farmers manage the tax burden associated with the transfer of farm assets. Although this is a minor increase, the resulting positive change is that it will be indexed with inflation, allowing the exemption to keep up with increasing real costs.

    - A major barrier for attracting new entrants to agriculture is Section 31 - Restricted Farm Losses - of the Income Tax Act. This section of the Act outlines circumstances under which a farmer's ability to claim farm losses will be restricted to $8,750, when a farmer also has incoming off-farm income. The Budget tabled today indicated an increase to $17, 500. The inability to claim more than $8,750 of farming losses was an unmanageable barrier for new entrants facing high farmland values and farming's increasing capital costs. The increase outlined in the Budget will only slightly improve the situation. The CFA has recommended the restriction increase to a more realistic $40,000 for new entrants to agriculture.

    The CFA is disappointed with the reinterpretation of this Section, requiring that off-farm income be a subordinate source to farm income. For the majority of new entrants to the industryand small-scale farmers, off-farm income represents a critical support in funding start-up costs, making farm expansions, and simply maintaining the viability of many of Canada's family farms. This reinterpretation may prevent these farmers from being able to claim more than $17,500 in losses, and may pose a challenge to entering or staying in the industry.

  3. #3
    Dennis Lapierre
    Join Date
    Dec 2009
    Location
    Falkland, BC
    Posts
    275
    Blog Entries
    13

    The following is an excerpt from the CFA news release on the federal budget. There were a couple of small wins for the small farmer:

    Taxation

    - CFA was pleased to see the increase of $50,000 to the Lifetime Capital Gains Exemption - an important tool for helping farmers manage the tax burden associated with the transfer of farm assets. Although this is a minor increase, the resulting positive change is that it will be indexed with inflation, allowing the exemption to keep up with increasing real costs.

    - A major barrier for attracting new entrants to agriculture is Section 31 - Restricted Farm Losses - of the Income Tax Act. This section of the Act outlines circumstances under which a farmer's ability to claim farm losses will be restricted to $8,750, when a farmer also has incoming off-farm income. The Budget tabled today indicated an increase to $17, 500. The inability to claim more than $8,750 of farming losses was an unmanageable barrier for new entrants facing high farmland values and farming's increasing capital costs. The increase outlined in the Budget will only slightly improve the situation. The CFA has recommended the restriction increase to a more realistic $40,000 for new entrants to agriculture.

    The CFA is disappointed with the reinterpretation of this Section, requiring that off-farm income be a subordinate source to farm income. For the majority of new entrants to the industryand small-scale farmers, off-farm income represents a critical support in funding start-up costs, making farm expansions, and simply maintaining the viability of many of Canada's family farms. This reinterpretation may prevent these farmers from being able to claim more than $17,500 in losses, and may pose a challenge to entering or staying in the industry.

+ Reply to Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts