Valuable tax preparation resources are available to communities across Ontario prepared by the Certified General Accountants of Ontario www.cga-ontario.org.
Here are three tips pertaining supporting local farmers:
• Tile drainage, clearing and leveling of farmland, as well as building an unpaved road, can be expensed in the year such payments are made or any portion carried forward to future years. However, land improvements on farmland rented out to another farmer/producer do not qualify for this deferral.
• Alternative energy projects under Ontario's MicroFIT program have been deemed by the CRA not to be incidental farm income. Revenue and expenses related to solar and wind energy production under this program must be reported on a separate business schedule using the accrual basis of accounting. Income tax regulations relating to these can be complex so it is advisable to consult with a CGA for more details.
• Because the CRA considers crop advances to be loans, in a better than average year, consider storing all or part of the crop and then taking an advance against it. This advance, which must be applied for early in the year, serves as an effective planning technique for farmers using the cash basis of accounting.
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