Farm accountant in Saskatoon

A crop year, not a calendar year

Grain and oilseed income in Saskatchewan lands when the crop is sold, and that is rarely when it was grown. A farm may carry last year’s canola in the bin while this year’s inputs are already paid for. Deferred grain tickets, marketing contracts and cash advances all shift the timing further. The farm’s year-end and its selling decisions have to be looked at together, not in separate conversations.

Cattle operations in the region have a different rhythm, with calves sold in the fall and feed bought through the winter, but the same principle holds: the tax year only makes sense when the operating year is understood first.

The cash method, and the adjustments behind it

Farming is one of the few businesses allowed to report on the cash method: income when the cheque clears, expenses when they are paid. It gives a farm real control over which year a sale or a prepaid input lands in. It also comes with inventory adjustments. When a farm shows a loss while holding purchased inventory, a mandatory adjustment can apply, and an optional one can be used to smooth income between years.

Used well, those tools keep a farm family’s income from swinging between a very high-tax year and a wasted low one. Used carelessly, they create a loss that cannot be used. Cash versus accrual covers the difference in general.

Zero-rated sales, recoverable GST, and PST exemptions

Most basic farm products, grain, oilseeds, pulses and livestock among them, are zero-rated for GST. You charge no GST on the sale but still claim input tax credits on fuel, fertiliser, repairs and machinery. That is why a registered farm is often in a refund position, and why registering is usually worthwhile even below the $30,000 threshold.

On the provincial side, Saskatchewan exempts many farm inputs from PST where the buyer is a farmer and the item is used in farming. The exemption depends on the item and its use, not on who the buyer is alone. A pickup that runs the kids to school is not a farm input. The general rules are on the Saskatchewan tax facts page.

Machinery, bins and the purchase-timing question

Combines, seeders, grain bins, shop buildings and trucks are recovered through capital cost allowance, each in its own class and at its own rate. An asset has to be available for use before it can be claimed, so a combine delivered after the year-end is next year’s deduction regardless of when it was paid for. Trading in old equipment reduces the class and can trigger recapture if the trade value is high.

Because farm income is uneven, the value of a large claim depends on the year it lands in. Buying to cut tax in a year that was already low is a common mistake. CCA classes sets out the categories.

Restricted farm losses and the off-farm job

Many farm families near Saskatoon have one spouse working in the city. Where farming is the chief source of income, alone or combined with that other work, farm losses are deductible in full. Where it is not, the loss that can be claimed against other income is restricted, and the rest carries forward against future farm income.

The test looks at time, capital committed and the farm’s profit potential, not just which income is larger in a given year. It is worth documenting while the farm is growing, before a loss year makes the question expensive.

Incorporating the farm changes the picture again. A farm corporation’s losses stay in the corporation rather than reducing the off-farm salary, which can be the right answer or the wrong one depending on where the family’s income comes from.

Passing the land and the operation on

Qualified farm property, the land, the quota where there is any and shares of a family farm corporation that meet the tests, can be transferred to a child on an intergenerational rollover that defers the gain. It can also qualify for the lifetime capital gains exemption on a sale. The tests look back over years of ownership and use, so they are planned well ahead of the transfer, not during it.

Succession also has a family side that no tax rule settles: which child farms, how the others are treated, and what the parents live on. EverStone works through the numbers with your lawyer so the plan is built on figures that hold up. Farm succession and rollovers goes further.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• Farm income and expense statement or T2 corporate return, with year-end statements
• Cash-method timing and inventory adjustments reviewed before year-end
• GST refunds claimed and PST exemptions applied correctly
• Machinery, bin and building CCA schedules
• Seasonal payroll for seeding and harvest crews
• Succession figures prepared for your lawyer and family

Monthly bookkeeping starts from $300 a month; a farm corporation’s year-end is quoted after a free consultation. See what it costs.

A farm that also runs trucks for hire shares ground with trucking accounting in Saskatoon, and one with a building side with contractor accounting.

Remote farm accounting from Abbotsford

Farm accounting for Saskatoon-area operations is delivered remotely from 32615 South Fraser Way in Abbotsford. There is no Saskatoon office and no local team. Grain settlements, bank statements and equipment invoices arrive through a secure upload link, meetings run by video or phone around seeding and harvest, and returns are signed electronically.