the other if that makes sense. Current owned and financed land will still be held personal, any future purchases likely to be in the corporation. If you have to draw large amounts out to pay personal land payments you are worse off being incorporated.
I would echo the comments about not buying cattle. You will end up with less $ when they are sold off so you would be better off paying the tax.
Nobody has mentioned donating the money but on a personal basis you actually get a much higher tax rate deduction with donations. Its not much different that buying 100k of cows, getting back 80 k the next spring.
The only other comment is regarding the land. If you have high principle payments personally before incorporating its not the incorporation's fault. Hopefully whomever is doing your incorporation will be able to calculate (and defend the calculation) a large shareholder loan. If only in a partnership 2 years, your partner would most likely have not created much partnership value unless you both rolled in equal shares of farm assets at the start. From what my accountant told CRA is having a lot of fun with accounting firms that are doing this wrong.
Basically what I am saying is that if the farm is all dad's and rolled into a partnership, mom only earns her share of the increase in valve while the partnership is in place. Calling it 50/50 at the end of 2 years would be the biggest breach of income splitting.
Yes I am very versed in this area. I asked a lot of questions as I wanted to understand it. Went through it twice, once with my spouse and a few years ago setting up my son.
All I can say is it shouldn't be rushed, your exit should be explained and the focus should not always be tax. Another huge advantage is if your accountant actually comes from farm or is actually involved with one. The interview question could simply be "what is the optimum seeding rate and survival rate in canola". If they have no idea, walk out the door
I would echo the comments about not buying cattle. You will end up with less $ when they are sold off so you would be better off paying the tax.
Nobody has mentioned donating the money but on a personal basis you actually get a much higher tax rate deduction with donations. Its not much different that buying 100k of cows, getting back 80 k the next spring.
The only other comment is regarding the land. If you have high principle payments personally before incorporating its not the incorporation's fault. Hopefully whomever is doing your incorporation will be able to calculate (and defend the calculation) a large shareholder loan. If only in a partnership 2 years, your partner would most likely have not created much partnership value unless you both rolled in equal shares of farm assets at the start. From what my accountant told CRA is having a lot of fun with accounting firms that are doing this wrong.
Basically what I am saying is that if the farm is all dad's and rolled into a partnership, mom only earns her share of the increase in valve while the partnership is in place. Calling it 50/50 at the end of 2 years would be the biggest breach of income splitting.
Yes I am very versed in this area. I asked a lot of questions as I wanted to understand it. Went through it twice, once with my spouse and a few years ago setting up my son.
All I can say is it shouldn't be rushed, your exit should be explained and the focus should not always be tax. Another huge advantage is if your accountant actually comes from farm or is actually involved with one. The interview question could simply be "what is the optimum seeding rate and survival rate in canola". If they have no idea, walk out the door
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