Farmers: Year-End Tax Review Saves Money

Are you spending enough time consulting with your clients who are unincorporated Farmers and Fishers? 

Remember, they must make one instalment payment per year on December 31, if their taxes owing exceed $3,000 in 2014 and both 2013 and 2012.  CPP and EI premiums are not included to determine if instalments are required to be paid. However, these amounts must be included in the calculation of the amount to be paid by instalments if instalments are required.

This year there is an additional consideration, though.  On October 30th, 2014, the federal government announced new tax relief for families with children under the age of 18 for the 2014 and subsequent tax years. The Family Tax Cut has the potential to reduce family taxes up to $2,000. Therefore it is important that Farmers and Fishers who are required to pay an instalment contact their tax professional or accountant, to estimate if they have to pay the instalment, or can reduce the amount that is owing based on the new Family Tax Cut.  Professionals can use the Income Tax Estimator from Knowledge Bureau to make that determination. Sign up today for a free trial to the Income Tax Estimator, if you are not already a subscriber. 

There are five special tax provisions that will reduce the taxes payable by farmers and these should be taken into account when calculating the instalment payment.  These provisions are:
• Tax deferral for flood or drought
• Specific rules that restrict the claiming of farm losses
• Claiming of Capital Cost Allowance
• Claiming of motor vehicle expenses
• Mandatory and optional inventory inclusion rules for cash basis farmers