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Hobby farms ain’t for profit

Hobby farms ain’t for profit

By Andrew Joseph,

For some people, having hobbies is their hobby. Regardless, people deserve to have a hobby as a means of fun and relaxation, with some having opted to purchase a farm as their hobby of choice.

Many people assume a hobby farm is merely a farm you have purchased that you can go to on the weekends or your holidays to get away from the usual urban drama--that it’s a way to relax and dabble in some farming or to partake of some horseback riding, hiring someone to look after the day-to-day while you are away.

While that is a hobby farm, defining it is probably best left to the Canada Revenue Agency.

You might wonder why the good ol’ Canada Revenue Agency feels the need to define what a hobby farm is and isn’t, but you know it always comes down to money.

For the uninitiated, real estate designated as farmland is taxed less than what the same amount of property would be taxed in a more urban locale. But, that still doesn’t give the hobby farmer a break.

Even if you think a hobby farm is run as a full-time or part-time profession, the Canada Revenue Agency only cares if you are trying to run the farm for profit. A hobby farmer does not gain the benefits of a regular farming business.  

A good tax adviser will tell you that neither farming expenses or property tax deductions may be claimed for a hobby farm because it is, per the Canada Revenue Agency, being run only for personal use.    

As such, should you wish to have beehives on your new agricultural property and make honey to sell in town at a local Farmers Market, your hobby farm has become a regular farm. You could maintain your hobby farm status, however, if you did not sell the honey but gave it away to family, friends or co-workers or just ate it all yourself.

Whether it’s for honey, veggies, fruit, eggs, flowers, sweaters—yes, wool sheared from your sheep—or your slaughtered livestock, if you sell your wares, your farm is not a hobby farm.

And there’s more definition of a hobby farm from the Canada Revenue Agency regarding farm income…

Farm income is defined as any income received from soil tilling, livestock rearing, maintaining racehorses, raising and/or showing livestock, raising fish or other aquaculture or the aforementioned bees, or even wild game reserves.

It also includes monies from soil tilling, operating a feedlot, raising poultry, dairy farming, and fruit framing—even if the fruits are used by yourself to make other foods or beverages to sell.

For a sports analogy: the moment you accept money to play a sport, you lose your amateur status and all its benefits. The same holds true for the hobby farmer—any attempt to capitalize on your hobby farm strips it of its hobby status.

The hobby farm is for personal use only. So sayeth the Canada Revenue Agency.

Photo by Christopher Carson on Unsplash

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