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Please Add this in to the
hobby farm section for the loss calculation for 1998 on.
My question is: Canadian-specific QUESTION: Our children bought a hobby farm in the Cariboo. Where would we search to find out the tax implications of such a purchase? (They have 10 acres, a barn, outbuildings etc.)
___________________________
I thought I had this answered at: http://www.centa.com/taxguide/taxguide.htm
However, the chapter on farms and hobby farms has disappeared
and will have to be put back up.
However, if you phone (604) 913-9133 on Saturday from 10 AM to
3 PM and ask Gillian, she can mail you a hard copy of the chapter and this will
remind her to get me to put the chapter on farming, gentleman farming and hobby
farming back up on the site.
The fact that you have called it a hobby farm means that it
has NO tax consequences on anybody;s tax return. There are no tax
deductions associated with a hobby farm.
A gentleman farm is one where there is a combination of income
from farming and another source and the income from farming is less than the
other source (truck driving, teaching, doctor, etc.). When this happens,
the deduction is limited on an annual basis to:
Amount of loss in year
$______________
$_____________ A
Loss up to $2,500
$______________ $_____________ B
Balance - up to $12,500
$______________
C
Half of Balance (max $6,250) $______________
$_____________ D
Restricted Farm Loss (Max $8,750) (B +
D) $_____________ $_____________ E
Carry Forward Restricted farm Loss (A
- E)
$_____________ F
The carry forward loss can only be used against future farming
profits.
A WORKING (non-restricted) farm is one where the farm is the
principal source of work and income and in this case 100% of losses are
deductible but there is not usually anything to deduct them against.
The CCRA (old revenue Canada) also has a farm pamphlet which
explains the basics well. You can get it mailed to you or pick it up off
the web at:
My own chapter is far superior when it comes to the definition
however, because it gives specific tax cases for you to compare your own
operation with.
There is no limitation on the size of the farm. Small
poultry operations can be run successfully on 10 acres. Small orchards of 10
acres can be a working farm. On the other hand, 640 acres of horse ranch
owned by DAND AUTO Parts was ruled to be a restricted farm even though they
were grossing significant amounts of money.
Hope this helps
david ingram -
www.centa.com
108-100 Park Royal South West Vancouver, BC, CANADA, V7T 1A2 (604) 913-9133 - Fax (604) 913-9123 cell (604) 657-8451 (10 AM to 10 PM 7 days) US / CANADA Income Tax and Working Visa Matters |
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