Financial Planning for Farming and Agriculture
Make the most of what you've worked hard for
How Can Financial Planning Help Me?
Farming is one of Saskatchewan’s core industries. It has also always been one of ATA Financial’ss key areas of focus. Our work over the years has provided us with a deep well of experience and case studies that allow our clients to make informed decisions on farm estate planning and transition. It is our ability to lead deep conversations about your family, your farming business and future legacy that sets us apart from any other financial advisory firm.
Tax Planning Tips for Saskatchewan Farmers
Under the Canadian tax code, certain types of property are categorized as “Qualified farm or fishing property” and may receive special treatment and considerations for tax and estate planning purposes. Qualified farm or fishing property includes:
- A share of the capital stock of the family farm owned by you or your spouse
- An interest in a family farm owned by you or your spouse
- Real property such as land and buildings that are part of the farm
- Property included in capital cost allowance Class 14.1, such as milk and egg quotas
If you own an interest in a family farm partnership or shares in a family farm corporation, you can take advantage of the Lifetime Capital Gains Exemption (LCGE). Defined in the Income Tax Act, the LCGE allows farmers to claim a tax exemption worth $1,000,000 upon the sale of the family farm, where capital gains would normally be taxed at a 50% rate.
If the farm is also used as a principal residence, additional tax exemptions could apply. There are additional requirements for the LGCE, so an in-depth look at your situation is required to verify that you qualify for the benefit.
For tax purposes, it is frequently best to operate your farm as a partnership. Partners can split income to reduce their total tax burden, and it can also simplify succession planning, especially in cases of accidental death.
Farm owners may also be able to take advantage of the small business deduction, which offers an exceptionally low tax rate on the first $500,000 of income for small businesses, as well as Saskatchewan’s Farm and Small Business Capital Gains Tax Credit.
Protect Your Family, Assets and Equipment
A farm can act as a home, a valuable income-generating business and a strong source of pride and identity for your family.
The unique connection between families and the farms they operate makes family and asset protection double important for families that wish to hold onto their farms for the coming generations. Through strategic financial management, ATA Financial Group can help:
- Limit your personal liability risk as a farm owner
- Reduce the likelihood that you could lose your farm in a lawsuit
- Ensure that your beneficiaries receive the maximum benefit from your estate
- Reduce your tax burden in estate planning
- Help coordinate estate plans and property ownership between family members
- Ensure that your family farm stays in your family for years to come
- Prevent the loss of your farm in the event of death, disability, critical illness or bankruptcy
Prepare for a Change of Hands with Estate Planning
Farming families benefit from significant tax advantages when it comes to passing down the family farm, so it’s often the case that estate planning issues are interpersonal rather than financial. Consider these three common scenarios:
1.
You wish to pass down the family farm, but none of your beneficiaries is willing to take over the business. What will you do with the property?
2.
All your children are beneficiaries of the farm, but only one of them wants to keep it in the family. Others have their own careers and would rather see the farm sold. How will you make everyone happy?
3.
You have most of your assets and net worth tied up in your farm, but you would prefer not to sell it. How will you raise cash to cover expenses (final medical care, funeral, probate fees, final estate settlement costs) and make sure your children all receive something when you die?
We advise all our clients in the farming industry to make these arrangements ahead of time and be open and honest with family members about what the plans are. This helps to avoid disappointment, confusion and needless conflict when it comes time to settle your estate.
Our Process
We’ve spent years helping Saskatchewan’s family farms make the most of what they’ve worked hard for – Let us show you how.
