Remember to file by April 30, a tax specialist said
By Diego Flammini
With tax season approaching for Ontarians and members of the ag sector, Farms.com connected with a tax specialist to provide tips when preparing tax documents.
Perhaps the most important item is ensuring taxes are filed on time.
Farming income is reported on a different date, but the taxes are still due by the end of April, said Hilde Trockstad, a member of MNP’s Taxation Services Group in London, Ont.
“Even though a personal tax return isn’t due to be filed until June 15 when farming income is reported personally, the taxes are still due by April 30,” she told Farms.com. “So, remember to pay tax instalments to avoid late payment penalties and interest charges.”
The federal government has announced support programs for individuals and businesses affected by the pandemic.
Some of these programs count as income and need to be included in tax preparation.
“The (Canada Emergency Business Account) loan for example has a forgivable portion, which must be included in taxable income,” Trockstad said. “Wage subsidies and Mandatory Isolation Support for temporary workers received by the employer are income.”
With respect to CEBA, if a business borrows $40,000 or less and repays the loan in full by Dec. 31 of this year, then 25 per cent of the loan, up to $10,000, will be forgiven.
If a business borrows more than $40,000 and up to $60,000 and repays the full loan by Dec. 31, 2022, then 50 per cent on amounts above $40,000 and up to $60,000 will be forgiven.
The federal government passed Bill C-208 in June, which establishes uniform tax treatment for the sale of a farm or fishing operation whether it’s sold to a family member or a third party.
Any farm succession transactions need to be included in tax returns, Trockstad said.
“The farmer would report the sale of shares on his or her personal income tax return,” she said. “In addition, the CRA requires disclosure to be filed specific to the Bill C-208 succession in the form of an Affidavit to confirm that the share sale took place. An independent valuation is also necessary to confirm that the transaction took place at fair market value.”