Capital Gains

[jazz]

Someone with a better back ground in accounting tell me why now would not be a good time to crystalize gains and take the tax advantages. By all accounts the inclusion rate is going to be cut to 50% and then maybe a cap on it as well. They will be coming for revenue to pay back this huge fck up.

By my calculations, just selling my land into my company would ensure my family never paid income tax in canada again. Most of you have to be in the same position. You watch our tax dollars get spent on everything but the industry we are in. $40B to native kids. $0 to ag. Like what do we owe this govt?

I feel like a sitting duck that in the spring budget they will make this change with the stroke of a pen and it will be gone for good.

We chat about a couple dollar move in canola every day but ignore the elephant in the room. Is nobody else concerned and not planning a pre-emptive move against such a tax grab?

[TASFarms]

If you can I would.

[beaverdam]

Jazz, don't doubt for a moment they haven't thought about that already, they'll find a away. Likely 90% of farmland held by ol' white people, ol' white people that don't vote for the Turd anyway. They've already been thinking of how they are going go after small private corps. Not sure it'll be the answer in the end, but might be worth a shot. I think they're coming for you either way. Tax free gifts likely on the radar too.

[poorboy]

On capital gains it is kind of silly that 50% is taxed. Income is income. Right now Gov’t is rewarding their rich buddies who own lots of stocks or real estate. Hearing talk of only allowing 1 million exemption on principal residences. If that happens than I think all capital gains will become more heavily taxed than the current 50%.

Jazz if you talking about crystalizing your 1 mil capital gains exemption, then I think it is a great idea. It only covers 1/2 mil in income, so pretty sure your kids will have to pay tax sooner than you think.

[fjlip]

Just USE it, or soon maybe LOSE it! We did...be a partnership FIRST, then into Corp.

[jazz]

Jazz if you talking about crystalizing your 1 mil capital gains exemption, then I think it is a great idea. It only covers 1/2 mil in income, so pretty sure your kids will have to pay tax sooner than you think.

Correct me poor boy but isn’t it actually $2M? Your spouse also gets a $1M exemption.

And the first $2M is fully exempt isn’t it? The 50% inclusion rate only applies on any income over that.

Also if your kids have been on titles for 2yrs they also qualify for a $1M exemption each.

There is no way this program doesn’t get hit for revenue. Surprised it hasn’t already.

[burnt]

jazz, you seem to think that you will be able to protect your net worth, in spite of what you are witnessing and attesting to all around us - just a few points:

1) Habitat 1 Human Settlement, Vancouver, 1976, clearly states that private property ownership creates inequity and social injustice, and must therefore be taxed on disposal,and that all private property must come under public control; http://ww2.unhabitat.org/declarations/vancouver.asp

(Can anyone open this link to copy of the text? It won't open for me.)

2) The above doc acknowledges that since some states have instruments in place to protect private property rights, governments must be creative in developing and implementing methods to overcome that 'obstacle', that inconvenience...

3) Our civil and legal system is very rapidly moving, and has moved from a historical basis of ratio decidendi into Obiter dictum. In simple terms, nothing is decided by historical legal precedent any longer so much as what the "judge" decides in the moment.

But I wouldn't discourage anyone from trying to retain their growth. Good idea.

Your best bet might be to strike an agreement with Justin - maybe something like placing 50% of your net worth into the Trudeau Foundation. He might then - might - let you keep the other 50%. Just because he's a gentleman.

[poorboy]

Your wife would be eligible for 1 mil capital gains exemption if she has filed farm income tax. If not, that is why everyone is doing the partnership thing for a few years, in order to get farm status. Your kids would only qualify if they filed farm tax for a period of time. Every accountant has a different version of whats needed, so please consult.

It is not an exemption of 1 million dollars, it is an exemption of 1 million dollars of capital gains, of which currently only 50% are taxable. So currently it would equal a 1/2 million of income tax free.

Capital gains used to be 70% taxable. So a million dollars capital gains exemption would be 700K tax free and should capital gains move to 100% taxable, then a million dollars capital gains exemption would be a million dollars tax free.

So use the capital gains exemption now and get 500K tax free or possibly get 700K or 1mil in the future if capital gains become taxed different. But there is always a chance they totally remove the exemption and lose it all.

[Richard5]

Your wife would be eligible for 1 mil capital gains exemption if she has filed farm income tax. If not, that is why everyone is doing the partnership thing for a few years, in order to get farm status. Your kids would only qualify if they filed farm tax for a period of time. Every accountant has a different version of whats needed, so please consult.

It is not an exemption of 1 million dollars, it is an exemption of 1 million dollars of capital gains, of which currently only 50% are taxable. So currently it would equal a 1/2 million of income tax free.

Capital gains used to be 70% taxable. So a million dollars capital gains exemption would be 700K tax free and should capital gains move to 100% taxable, then a million dollars capital gains exemption would be a million dollars tax free.

So use the capital gains exemption now and get 500K tax free or possibly get 700K or 1mil in the future if capital gains become taxed different. But there is always a chance they totally remove the exemption and lose it all.

I don't feel you have it explained correctly either. 1 million capital gains when using your exemption is 1 million of income or gain tax free. The 50% is only how its reported on the tax return.

[Richard5]

Someone with a better back ground in accounting tell me why now would not be a good time to crystalize gains and take the tax advantages. By all accounts the inclusion rate is going to be cut to 50% and then maybe a cap on it as well. They will be coming for revenue to pay back this huge fck up.

By my calculations, just selling my land into my company would ensure my family never paid income tax in canada again. Most of you have to be in the same position. You watch our tax dollars get spent on everything but the industry we are in. $40B to native kids. $0 to ag. Like what do we owe this govt?

I feel like a sitting duck that in the spring budget they will make this change with the stroke of a pen and it will be gone for good.

We chat about a couple dollar move in canola every day but ignore the elephant in the room. Is nobody else concerned and not planning a pre-emptive move against such a tax grab?

Myself, I would never put any more land into your company that you already have, especially if you are only trying to use your capital gains exemption. I think you need to talk with my accountant or someone who knows the options of Bill C208. Keep your land out, transfer to your kids, a long lasting legacy.

As to the comment about your family never paying tax again, what do you think happens when the land in the company is sold or someone wants to close up the company. Its a dividend to your or your kids someday

[Guest]

Someone with a better back ground in accounting tell me why now would not be a good time to crystalize gains and take the tax advantages. By all accounts the inclusion rate is going to be cut to 50% and then maybe a cap on it as well. They will be coming for revenue to pay back this huge fck up.

By my calculations, just selling my land into my company would ensure my family never paid income tax in canada again. Most of you have to be in the same position. You watch our tax dollars get spent on everything but the industry we are in. $40B to native kids. $0 to ag. Like what do we owe this govt?

I feel like a sitting duck that in the spring budget they will make this change with the stroke of a pen and it will be gone for good.

We chat about a couple dollar move in canola every day but ignore the elephant in the room. Is nobody else concerned and not planning a pre-emptive move against such a tax grab?

It’s only a million
Am I missing something?

[fjlip]

A million PER partner farming, need that first to equal the wife. Roll into Corp after 3 years.

[GDR]

Jazz I think we all understand your concern and thought process. We just did the partnership rollover others have talked about to use our CGE partly because it was time and partly because I too believe they are coming for more tax dollars.

The 1 million cap gains exemption isnt perfectly tax free. There is a complicated tax formula that will assess an Alternative Minimum Tax that you have to pay but you can sort of use it as a prepaid tax account that you can use over the next number of years to offset tax payable in those years. Need to do some planning here with someone who knows.

As for the kids, just because they are on title doesnt qualify them for CGE. The advice 25yrs ago was to add all the kids and the family dog to the title so lots did that. Now there seems to be some concern about this as it complicates other matters. ie personal residence exemption.


Relating to CGE, an FYI, I have neighbours going through a tough time after the mother passed away. 5 quarters, 4 children, one added to each quarter title, 5th quarter left to estate to pay tax burden. Problem is each quarter has a million dollar gain, the fifth quarter wont pay the taxes, none of the kids want to sell but none can afford the tax to be able to keep. There is a rule for the CGE to apply you have to have farmed one year longer than you have been a landlord. The father had passed away 26yrs ago and land has been rented since, he farmed for 25 yrs before he died so the family cannot use the CGE.

I also hear discussion about using Trusts to lock in or reset your ACB. Dont know anything about it but might be worth looking into.

[AlbertaFarmer5]

If the goal is to stay a step ahead of possible tax changes, keep in mind that companies don't vote, middle class taxpayers do.
Not much political fallout from taxing corporations. Where as taxing the voters is a sure way to lose the next election.
And farmers don't vote Liberal (except carpet farmers, right Chuck), so taxing corporate farms is the path of least resistance.
Be it gc, income tax, property taxes, environment tax or outright wealth tax.

[SASKFARMER]

I agree Alberta.

Plus you can bet there are more people working in Ottawa on how to tax Corporations more than taxing individuals. Plus these people will be working with gov to do all the steps that the best accountants in Canada cant prepare for.

Maybe that's why Little perogies' family sold out.

Who knows but I can bet they will be coming after us and hard. Give him a mandate and you will see.