When it comes to farming in British Columbia, there are many expenses that can occur throughout the year. Though some of these expenses may seem unimportant or insignificant, many of them can be claimed as a tax deduction. Knowing what tax deductions are available for farms is crucial for maximizing your return and ensuring optimal value for your hard-earned work. As leading providers of tax services for farmers, Leskun & Son Accounting understands the deductions that can be claimed by various types of farming operations. That is why our team has provided a list of deductions that are available to most farmers.
Farm Tax Deductions
Most of the rules that apply to Canadian small business owners also apply to farmers and agricultural producers. The following expenses and tax deductions can be claimed by most farmers to increase their return or reduce the amount owed:
Building Repairs and Maintenance
Have you performed repairs or maintenance on your fence, barn, or living spaces on your farm? If so, you may be able to claim relevant expenses for materials or claim the cost of labour when hiring a professional. Examples of these expenses can include replacing fence posts, repainting your barn, or constructing a new facility.
Capital Cost Allowance
If you acquire a depreciable property/asset for your farm—a building, furniture, or equipment—that is valued above a certain amount, you can likely deduct this cost over a period of several years. This yearly deduction is referred to as capital cost allowance (CCA), but there are several rules that need to be followed to claim it. To ensure that all rules are adhered to, it is best to enlist the aid of professionals like that team at Leskun & Son Accounting.
In addition to the aforementioned expenses, there are several miscellaneous purchases and costs that can be claimed. Deductions can often be claimed for the following costs:
- Clearing, levelling, and draining land.
- Containers for produce and other sellable products.
- Crop insurance.
- Custom or contract work, including machine rentals.
- Feed, supplements, straw, and bedding for livestock.
- Facility heating.
- Livestock insurance.
- Machinery purchases and repairs.
- Motor vehicle purchases and repairs (if used to generate farming income).
- Property taxes.
- Employee salaries, wages, and benefits.
Each of these costs and more can be claimed as a deduction for most farms, maximizing value. Learn more about what business expenses are tax deductible.
If you would like to learn more about tax deductions for farms, get in touch with the team at Leskun & Son Accounting. We can be reached through our online contact form and will work with you to provide the perfect accounting solution for your specific needs.