Returns for Farming Businesses

Do you operate a farming business? For income tax purposes, the Canada Revenue Agency (CRA) determines you are a farmer if you claim income from farming activity. To be considered a full-time farmer however the farm income will be compared to any off-farm income – if the off-farm income is higher the individual will only be eligible to only claim part of any farming losses against their other income. In addition, the farm business must show a potential for profitability.

Farming income includes income you earned from the following activities:

  • Soil tilling
  • Livestock raising or showing
  • Racehorse maintenance
  • Poultry raising
  • Dairy farming
  • Fur farming
  • Tree farming
  • Fruit growing
  • Beekeeping
  • Cultivating crops in water or hydroponics
  • Christmas tree growing
  • Operating a wild game reserve
  • Operating a chicken hatchery
  • Operating a feedlot

In certain circumstances, you may also earn farming income from:

  • Raising fish
  • Market gardening
  • Operating a nursery or greenhouse
  • Operating a maple sugar bush (includes the activity of maple sap transformation into maple products if this activity is considered incidental to the basic activities of a maple sugar bush, such as the extraction and the collection of maple sap, which are farming activities)

Farming income does not include income you earned from working as an employee in a farming business or from trapping.

Your farming income is reported along with any personal income on a T1 Income Tax Return. Your deductions can include business-related expenses as well as expenses related specifically to farming. Full time farmers also receive special consideration when it comes to capital gains calculations.

There are many farm tax breaks you may be entitled to. As a farmer, you can also deduct all the typical business expenses from your income.

Contact us to discuss your tax reporting options and let us help you to determine all the deductions you may be entitled to.