JayDee Ag Tech Humboldt

[Richard5]

I am no genius but it was once described to me as something like when you have either more than 10 million in retained earnings or total debt that your small business limit gets taken away. Its like clawback of oas pension for seniors.

If you have 11 million debt you may only have 400000 that you can pay the low rate on, 27% on everything after

S3 prob knows this because of his big net worth

[farmaholic]

R5, from some of the stuff I've seen around here, some of the big operations with lots of fingers in the pie are no different than a smaller operation. What's the difference if three families make a living on 7500 acres or one family on 2500? I suppose there are some synergies and labour benefits to multiples.

I'll ask my accountant about the retained earnings thing....not that that value is attainable by me anytime soon.

Got to be some restructuring options when things get to that level.... holding companies???

[LEP]

Richard5 corporate capital tax is charged on paid up capital over $10million. It was eliminated in 2008 or 2009 in Saskatchewan.

The Sask. small business tax rate applies to the first $500k of corporate taxable income at the rate of 13%. Anything over that is taxed at 27%.

I would say most of these mud occur because John Deere is quite lenient on their criteria.

Used to be good deals, but with a dropping dollar and jumping cost of new. The party is just about over. All that is left to really wind things up would be a sizeable jump in interests rates.

As for US farmers keeping the new equipment moving , I heard the average US farmer is in the red by $400 per acre with the price of corn dropping.

[Richard5]

I think you are describing some type of surtax

Maybe capital tax is the wrong words but there is something that determines if you qualify and are viewed as a small business and therefore the first 500,000 of low rate

Very large companies dont have the first 500 k at 13%, they would pay 27% on dollar 1

[Richard5]

http://www.taxplanningguide.ca/tax-planning-guide/section-1-businesses/the-small-business-deduction/

Here it is. The calculation is based on retained earnings and debt. Once a farm has more than 10 mill the 500,000 braken is reduced and all lost when at 15 mill

I am think some farms carry a pile of debt and some that are doing very well high profits this would impact them soon

6000-7000 acre farms like mine, well its a long way or impossoble

[Richard5]

I think you are describing some type of surtax

Maybe capital tax is the wrong words but there is something that determines if you qualify and are viewed as a small business and therefore the first 500,000 of low rate

Very large companies dont have the first 500 k at 13%, they would pay 27% on dollar 1

[highwayman]

Just went through a corporate restructure in order to avoid what you describe. GOC does not view companies with more than 15 million in assets as a small business, regardless of debt. Cash deposits in excess of certain percentages of gross asset values also become a taxation problem. Solution as explained by our accountant was to maintain operating company as is and move land assets into 2 new holding companies owned by wife and I. Not a cheap transition but the alternative was far worse.