Business & Policy
Tax planning and managed accounting important for farmers
Farming is a unique type of business that causes financial planning to take on dimensions not often seen in other industries. This is reflected in the Income Tax Act, which has numerous provisions for things like farm income, tax deductions, various subsidies and more.
October 17, 2016 By FBC Tax Consultants
It can feel at times overwhelming and hard to keep up-to-date. Fortunately, there are people with the knowledge and expertise who can help. Engaging an accounting or tax planning firm can give your farm the ability to grasp the nuances of the tax laws and get the most tax deductions and minimal liabilities possible.
Navigate an ever-changing landscape
Small businesses and farms are subject to various types of subsidies and tax quirks that the provincial and federal governments use to help spur growth or respond to situations like droughts or cold snaps.
Tax legislation relevant to farming and small business is regularly tinkered with as government tries to respond to industry shifts, projections and predictions, or other concerns that may or may not be more hype than substance.
Knowledge is power when dealing with subsidies, and managed accounting can give you the power needed to keep track of the benefits you qualify for as well as how to take advantage of them.
Reconcile reality with government
Government works best when things can be precise and measured. As any farmer knows, nature doesn’t always care for timetables. This can lead to situations where seemingly trivial differences in how an animal or piece of equipment is used can affect how it gets classified for tax purposes. Tax planners can help you interact with this sort of bureaucratic matter and ensure you don’t inadvertently run afoul of the Canada Revenue Agency or miss out on a tax deduction you should have been able to claim.
Accounting for it all
Among the various types of income that need to get reported are profits from property or livestock sale, breeding fees, renting fees, incidental income, all taxable subsidy and conservation payments, and gross income from other sources.
Expenses can include things like feed, pest management products, fertilizer and more.
Even if you don’t have an upcoming tax filing to make, this all results in a great many numbers to keep track of. Accounting services can help you stay on top of your income and expenses so you can have a full and accurate view of your financial situation.
FBC is a farm and small business tax specialist, providing tax accounting and bookkeeping services to more than 20,000 farms and small businesses from Ontario to British Columbia. The company’s complete financial planning services for farm and small business owners take a long-term approach to address specific needs at all stages of life and business, minimizing a farm’s taxes year after year. Year-round services include tax planning, tax optimization, business consulting and audit protection.