Lorkovic DeKoning Wealth Management
September 30, 2019
Navigating Farm Finances: CCA Updates, Succession Planning & U.S. Property Sales
The Fall 2019 issue of Intelligent Farmer delivers critical insights on financial strategies, tax planning, and succession for Canadian farmers. Here’s a breakdown of key topics:
Click here to download the full Fall 2019 issue of Intelligent Farmer today
Capital Cost Allowance (CCA) Rule Changes
Farmers can now claim enhanced write-offs for capital assets purchased between November 21, 2018, and December 23, 2023. This allows up to 45% of the cost to be deducted in the first year, but this benefit is temporary. Act before the deadline to maximize savings.
Farm Succession Planning: 10 Critical Questions
When transferring the farm to children, farmers must address key issues:
- What are the prerequisites for ownership?
- Will ownership be split among multiple children?
- How will parents be compensated?
- How will decisions be made among multiple owners?
- Will ownership be given or sold?
- What happens if a child wants to exit the agreement?
- What role will parents play post-transition?
- How will control be maintained during the transfer?
- What income sources will parents have after transfer?
- How will non-farming children be treated?
Selling U.S. Property: Tax Obligations
Canadians selling U.S. property face dual taxation. The Foreign Investment in Real Property Tax Act (FIRPTA) requires 15% withholding, but exemptions or IRS Withholding Certificates can reduce this burden. Proper planning and professional advice are essential to minimize taxes.
The Pitfalls of Tax Deferral
While deferring taxes via accelerated CCA or expense write-offs may seem beneficial, it often only delays obligations. Incorporated farms may not see absolute savings, while proprietorships and partnerships might. Consult a tax professional to avoid future liabilities.
Don’t miss the full issue.
RBC Dominion Securities Inc. | Lorkovic DeKoning Wealth Management