Poor boy.
You are correct with the shares but I am guessing you had to transfer land to get the tax basis of a direct incorporation to work. Because land can be transferred to the next generation and has special tax treatment anyway if you have no capital gains exemption left (50% of the gain is taxable) you will want to use your remaining exemption in any other way if possible. It can be tough to sell shares of a farm corp as well.
You still could have done the partnership route by forming a partnership with your spouse and your company. This would have given you both benefits of immediate tax relief and the benefits of the partnership.
I also agree with your comments about CRA's cash basis accounting however it doesn't really effect agristability directly.
Because of the accrual calculations that happen with the application, no matter what you have done tax wise is adjusted to reflect the true profit/loss of the year.
The indirect impact of this on agristability are things like (as I see it):
a) If your farm is highly cash taxable,are you selling when you need to or holding off
b) Normally, farms that are trying to avoid the tax man get cash strapped because of increased debt, increased principle portions, capital purchases for tax reasons not business reasons. If this is the case, do they put everything into the crop that gives it the best productivity
As to the crop insurance and self insuring comments, remember, if you can make a buck somewhere else you are better off as the program only coverers about 60% of the actual loss.
In addition, their is a calculation that is done when you have a payment triggered that looks at your margin with the insurance proceeds and premiums included and if your reference margin is lower because of this, your payment is recalculated.
Quick cash, spot and single crop coverage would be other reasons to look at.
I believe in 70 or 80% crop coverage and have carried it on all crops for as long as I can remember. Hail is taken every year as well depending on the crops value and weather.
You are correct with the shares but I am guessing you had to transfer land to get the tax basis of a direct incorporation to work. Because land can be transferred to the next generation and has special tax treatment anyway if you have no capital gains exemption left (50% of the gain is taxable) you will want to use your remaining exemption in any other way if possible. It can be tough to sell shares of a farm corp as well.
You still could have done the partnership route by forming a partnership with your spouse and your company. This would have given you both benefits of immediate tax relief and the benefits of the partnership.
I also agree with your comments about CRA's cash basis accounting however it doesn't really effect agristability directly.
Because of the accrual calculations that happen with the application, no matter what you have done tax wise is adjusted to reflect the true profit/loss of the year.
The indirect impact of this on agristability are things like (as I see it):
a) If your farm is highly cash taxable,are you selling when you need to or holding off
b) Normally, farms that are trying to avoid the tax man get cash strapped because of increased debt, increased principle portions, capital purchases for tax reasons not business reasons. If this is the case, do they put everything into the crop that gives it the best productivity
As to the crop insurance and self insuring comments, remember, if you can make a buck somewhere else you are better off as the program only coverers about 60% of the actual loss.
In addition, their is a calculation that is done when you have a payment triggered that looks at your margin with the insurance proceeds and premiums included and if your reference margin is lower because of this, your payment is recalculated.
Quick cash, spot and single crop coverage would be other reasons to look at.
I believe in 70 or 80% crop coverage and have carried it on all crops for as long as I can remember. Hail is taken every year as well depending on the crops value and weather.
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