Farm accountant for the Portage la Prairie region

The year-end covers the T2 with Schedule 1 and Schedule 50, the CCA schedule, the small business deduction, T4 or T5 slips for the owner’s pay, and the instalments for the year ahead.

Farm families that run a contracting, hauling or processing business on the side share questions with the Portage la Prairie manufacturer page, and payroll for seasonal help is covered on payroll in Portage la Prairie.

Contract crops and when the money arrives

Processing potatoes in Manitoba are grown under contract, and the province notes that between mid-August and early October harvested potatoes go directly from field to processors, with stored crop supplying the plants through the rest of the year. For a grower, that means deliveries and payments can be spread well past harvest, and part of a crop may sit in storage at the year-end date. Grain and pulse growers face a similar question with deferred cash purchase tickets and sales they choose to hold into the new year. Knowing exactly when each payment is received, and how each contract defines delivery, is the starting point for timing income.

The cash method, and the adjustments that come with it

Farming income can be reported on the cash method: revenue when the money arrives, expenses when they are paid. That gives a farm real control over timing. A crop can be sold in January rather than December, and inputs for next season can be paid before year-end. Used well, it smooths income across good and poor years.

It comes with rules. Where a cash-method loss includes purchased inventory still on hand, a mandatory inventory adjustment adds some of it back. An optional adjustment lets you add income in a low year to use up personal credits that would otherwise be wasted. Both are decisions for the months before year-end, not the week the return is due. Unincorporated farms report on form T2042 with the T1. The cash versus accrual guide explains the two methods.

GST: zero-rated sales, credits still claimed

Most basic farm products — grain, oilseeds and livestock raised for food among them — are zero-rated. You charge no GST on them, but because they are taxable at 0% rather than exempt, you can still register and claim input tax credits on the GST you pay for fuel, repairs, equipment and services. Many inputs are themselves zero-rated, but plenty are not, and a registered farm usually files for refunds rather than payments.

Manitoba adds the 7% RST, and certain farm machinery and inputs are exempt when the conditions are met — supported by paperwork at the time of purchase. Sales that are not basic farm products, such as custom work for a neighbour, trucking for others or a farm-gate stand selling prepared goods, may carry GST. The zero-rated versus exempt guide sets out the difference, and GST filing in Portage la Prairie covers the returns.

Equipment, bins, storage and land

Combines, tractors, planters, harvesters, grain bins, potato storage buildings and shops are recovered through capital cost allowance by class. Land is not depreciable at all, which matters when a purchase includes both. A trade-in is a disposal, and selling equipment for more than its remaining tax value brings the difference back into income as recapture. Timing a large purchase around year-end, and around a strong or weak crop, changes when the deduction helps most. Used equipment bought from a dealer outside Manitoba may need RST self-assessed unless an exemption applies.

Keep invoices, financing agreements and trade-in documents together. The CCA classes guide covers the rules, and bookkeeping in Portage la Prairie keeps the asset register current through the year.

Qualified farm property and passing the farm on

Farmland, quota and shares of a family farm corporation can be qualified farm property. When it is sold, the gain may be sheltered by the lifetime capital gains exemption, and each family member who owns an interest may have an exemption of their own. The tests look back over how the property was used and by whom, so they have to be checked well before a sale.

Passing the farm to a child can be done on a rollover that defers tax, with no dollar limit on the value transferred, as long as the property has been used in farming by the family. Rollovers, estate freezes and farm partnerships each fit different families. The farm succession guide and the capital gains exemption guide explain the options.

Restricted farm losses and the acreage question

Not every farming loss can be deducted in full against other income. Where farming is not your chief source of income, alone or combined with another business, losses can be restricted and carried forward rather than used now. This comes up often around Portage la Prairie, where many families farm alongside an off-farm job at a processing plant, at Southport or in town. The answer depends on the time, capital and intent the farm really has, and we look at the facts before the return is filed.

Family labour raises a related point. Paying a spouse or teenage children for real work on the farm is deductible when the pay is reasonable for what they do and is actually paid, with payroll records to match. Dividends from a farm corporation to family members are subject to the split-income rules, though farm families have exceptions of their own. See paying your spouse a salary and the guide to tax on split income.

Incorporated farms and the small business rate

An incorporated farm earning active business income pays Manitoba’s nil small-business rate plus the 9% federal rate on income up to the $500,000 business limit. Where the same family also owns a trucking, custom-work or land company, the companies may be associated and share that limit. Planning the owner’s draw, the limit and the family’s personal returns together is where most of the savings are.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• Farm income on the cash method, with inventory adjustments
• T2 and financial statements for incorporated farms
• GST registration and refund filings
• CCA schedules for equipment, bins and storage buildings
• Qualified farm property and succession planning
• Payroll for seasonal and family workers

Fixed fees, fully online

EverStone works with farms entirely online, and nothing needs a drive into town. Grain tickets, settlement statements, equipment invoices and bank records come through a secure upload link. A self-employed T1 with farm schedules commonly runs $250 to $450 for a Portage la Prairie farm family; incorporated farms are quoted after we review your enquiry. See what it costs.

Remote farm accounting

EverStone is a fully virtual, one-CPA firm, serving Portage la Prairie farms entirely online. There is no Portage la Prairie office and no local staff. Meetings are held by video, documents are exchanged securely by email, e-signature and a secure upload link, and no visit is required at any point. Grain tickets, settlement statements, equipment invoices and bank records come through the secure upload link, in whatever form you keep them.