Using Your Children’s CGE for Tax-Free Withdrawals from Your Corporation
This week we’re going step by step into a strategy that allows you to withdraw cash from your corporation essentially tax-free by using your children’s capital gains exemption. All right, so here’s what you’ll need to pull this strategy off: Number 1 - a farm corporation. You know what scratch that – a successful [...] Bill C-208 Part 2: Using Your Capital Gains Exemption
In part 2, we'll be going over a strategy that you can now use due to Bill C – 208. Using your capital gains exemption This strategy allows you to use your capital gains exemption while you're alive while also withdrawing cash from a corporation tax preferred. Watch the video above for a farm [...] Bill C-208 Explained
Bill C-208 Bill C-208 was created to alleviate the financial disadvantage that typically arose for taxpayers who sold their business or family farm corporation to their children or grandchildren, as compared to selling to an arm’s length third party. This disadvantage was caused by certain tax rules. Specifically an anti-avoidance rule in section 84.1 of [...] 2 Things That Should Be In Your Corporation
Today let us look at the two things that business owners own personally and should actually be owned corporately. Personal Debt Number one is your debt. If you have any personal debt, mortgages, credit cards, car loans, consider trying to move those into your corporation because then you're able to write off the interest. [...] When to Incorporate
When does it make sense to incorporate? Farmers, of all ages, are asking this question more and more as farm revenue steadily increases with rising commodity prices. But when is the right time? In this video, Colin compares the differences between being incorporating versus claiming farm revenue as personal income, from a cash flow and [...] What is fair?
In this video, Colin reviews the 2 extremes when it comes to taking care of your non-farming children. Option 1, leave the farm to your farm child, and whatever is left to your non-farming children. Option 2, split everything up evenly. The solutions to "What is Fair" usually lies somewhere in between. Don’t Lose Your O.A.S When Selling
In this video, I go over what Old Age Security is when the clawback starts, and a scenario where you sell your farm and the clawback will likely occur. The Farm Transfer Tax Bill
The Farm Transfer Tax Bill C-208 Explained As you may have recently heard, Bill C-208 is proposing to amend the federal income tax act so farm sales to children aren’t taxed at a higher rate when compared to selling the farm to a third party. Many articles explain that farm sales to third parties qualify [...] Farm Corporations & RRSPs
In this week's video we review at what income levels it makes sense to make RRSP contributions if you're incorporated. CLICK HERE for my previous RRSP video: Farmers & RRSPs Starting Your Farm Transition
Our video this week is an interview with "Canada's Farm Whisperer" Elaine Froese. Get in touch with Elaine by visiting these links: https://elainefroese.com/ https://elainefroese.com/virtual-kitchen-table/ Background Image by Anna Workman, Life in Bloom Photography. Farmers and RRSPs
In this week's video, we go over how to properly use RRSPs as a farmer. A Capital Gains Exemption Quirk
If you're not a farmer, but you own farmland that qualifies for the capital gain exemption, make sure you don't pass away before using the exemption! Gifting the Farmland
Gifting the Farmland In this week’s video we review the different ways you can gift farmland to your children along with the pros and cons of both methods. Beware of AMT
Beware of AMT Here is a quick video on what alternative minimum tax is and how it works. Enjoy! Does Your Spouse Qualify?
Does your spouse qualify? This week we interviewed Julien Grenier, accountant, and partner at Talbot & Associates. We discuss what CRA looks at when determining whether your spouse can or can’t use their capital gains exemption on the sale of your farmland. Julien can be reached at julien.grenier@talbotcpa.ca or 204-269-7460 Too Much Cash in Your Corp!
Too much cash in your corp See my latest video going over a case study where one farmer thought his farm corporation qualified for the lifetime capital gains exemption but didn’t due to having too much cash. Let’s Multiply Your Capital Gains Exemption
Let's Multiply Your Capital Gains Exemption As a farmer, you have a lifetime exemption of one million dollar on the sale of farmland. If you exceed that amount, you could be looking at a large tax bill. Here is an option to increase your capital gains exemption. In this video, we will show two things. First, when no plan is in place and the ensuing tax bill. Second, how your tax bill may be substantially decreased with the aid of using this approach. [...] Trusts – How to keep your farmland in the family and save taxes
This quick video on trusts explains how to keep farmland within the family while being as tax-efficient as possible! Farm Retirement Planning – Option 1: Don’t Sell the Farm
Farmland has been one of the best investments in Canada for the past 25 years.This is clearly shown by an annual growth rate averaging over 5% (as per FCC). If looked at as potential rental income, farmland generates around 7% in annual returns without the wild ride of investing in alternative asset classes. To make [...] US Elections – Should you make moves in your portfolio?
The US election is weeks away and there is no shortage of predictions on how the winner will impact the markets and economy as a whole. Although our natural reaction is to guess how the outcome of the election will impact your wealth, it becomes a futile exercise when we realize how much there is [...] Investment Ideas After You’ve Sold the Farm
I often receive these types of calls after a farm is sold: What can I invest in that’s going to give me a reasonable rate of return? What can I invest in that is safe? What can I invest in that’s going to match the farm rent I was receiving? There are unlimited options to […]
Private Health Care Spending Accounts: How Can They Help Your Business?
An Educational Webinar presented by Colin Sabourin CFP, CIM, CAFA, and Pierre Normandeau CPA, CGA, IMPORTANT: This webinar is for business owners who are incorporated. In the presentation, Colin and Pierre go step by step through: ➡️How Private Health Care Spending Accounts work ➡️What qualifies as a medical expense ➡️Tax benefits for the corporation ➡️What [...] Selling The Farm? Keep an Eye on Your Tax Bracket
A Simple Formula to Calculate What Is Fair
Figuring out how much your non-farming children should receive when you pass away compared to your farming child is tough. As I’m sure you’ve heard, fair doesn’t always mean equal when it comes to farm transition planning. To help you get started on coming up with a “fair amount,” here’s a formula you can use. […]
Is Farmland a Good Investment? Part 2
Last week we looked at the cash flow farmland generates (See Part 1). We assumed one acre was worth $6,000 and the rental income was $130/acre. This gave us a rate of return of approximately 2.17% on the rental income. We concluded there were alternative investments with better rates of return (GICs and dividend-paying stocks […]
Is Farmland a Good Investment?
My immediate response would be, who’s asking? An investor or a farmer? Because their goals for the farmland are completely different. Farmers have multiple reasons why farmland would be a good investment beyond simply looking at the rate of return. For this analysis, let’s look at it from the perspective of an investor. This could […]
Investing after you’ve sold the farm
You’ve done your tax and succession planning, you’ve had the big farm auction, and your farm is sold. You’ve given some money to the kids, you’ve paid off your debt, you’ve made a few charitable donations, and you’re left sitting with $2,000,000 in cash. Now you’re left wondering, “Where do I even begin with this […]
How to convert your health expenses into corporate expenses
Today, I’ll be showing you how to tax-efficiently convert your family’s healthcare costs, into a corporate expense with the use of Private Health Service Plans. The scenario Here’s our scenario. You go to the dentist for your annual checkup, and lo and behold they’ve got bad news for you. You’re going to need some dental [...] Is life insurance an investment or expense?
Are you thinking about purchasing life insurance as a succession planning tool, but having trouble wrapping your head around the annual costs? You might be thinking, “I could be using this cash to buy more land, pay off debt, increase my salary, upgrade my equipment, etc.” I get it, insurance isn’t a very exciting topic, […]
Should I buy life insurance today or tomorrow?
Life insurance is one tool farmers use to help equalize their estate. Below is a comparison of the different costs of buying your life insurance today rather than waiting until you’re older. The scenario You have two children. One would like to farm; the other one isn’t interested. You want to make things fair, [...] Start your succession planning with the basics
Don’t wait until you have all the answers before you start working on a succession plan. As farm advisors, we often get questions like “How much does insurance cost for someone like me? What would the tax consequences be if I transferred land to my children? If I sell my land and invest the proceeds, […]
Can I actually sell my farmland tax-free?
Can I actually sell my farmland tax-free? This week I’ve invited Julien Grenier, Accountant and Agricultural Manager at Talbot & Associates to provide us with insight on qualifying for your capital gains exemptions. As a financial planner, I lean heavily on professionals like Julien to provide my clients with proper tax advice. As you can see […]
Generating retirement income from your farmland
Entering retirement with farmland that you can use to generate rental income is a great way to create a steady income. However, there are a few points to consider to make sure you’re generating enough income and being as tax efficient as possible. Have a plan Unfortunately, land isn’t like a savings account. If you’re […]
Life Insurance – Why Millionaires are Buying as Much of it as Possible
If you’re in your sixties, you’ve most likely had a need for life insurance in the past. Whether it was when you purchased your first home and wanted to protect your spouse and children, or when the bank required it as a condition of lending you money. These were situations when life insurance was a […]
I Just Sold my Farm, Now What?
You’ve put in years of blood, sweat, and tears into your life’s work and you’re finally able to enjoy the fruits of your labour. You no longer have to worry and stress about grain prices, rain, carbon taxes or whatever other phenomena that affected your crops. You’re now sitting at home, looking at your (presumably […]
