ONTARIO GRAIN FARMER BUSINESS SIDE 27 C M Y CM MY CY CMY K Altoya_Pub_Print.pdf 1 2026-07-22 13:31:10 accountants, lawyers, financial advisers, and insurance professionals may all have a role. Ownership can become particularly complicated when some children work full-time on the farm and others do not. The goal is not simply to minimize tax, but to create a structure that works for the family and the farm business. Q: WHAT RECORDS SHOULD FARMERS BE KEEPING NOW? A: Keep the documents supporting the cost of the farm permanently. That includes purchase documents and invoices or contracts for buildings, additions, silos, manure pits, and other capital improvements. Farmers should also preserve records showing the farm's history of active farming, particularly when property has passed between generations or the current owner no longer actively farms it. Don't assume documents can be discarded simply because seven years have passed; some may be important many years later when property is transferred or sold. Q: DOES THE WAY A FARM BUSINESS IS STRUCTURED AFFECT CAPITAL GAINS? A: Very much so. The rules for the Lifetime Capital Gains Exemption and the intergenerational rollover are detailed and differ depending on how the farm is owned. A corporation itself does not have a capital gains exemption, but shares of a qualifying family farm corporation may be eligible. Capital gains on the sale of qualified farm property in a partnership are generally reported by the individual partners, who claim the capital gains exemption, while a sole proprietor selling qualified farm property is also eligible to claim the capital gains exemption. The intergenerational rollover rules have their own tests and requirements, so ownership and structure should be reviewed as part of succession planning rather than left until the time of transfer. Q: IF YOU COULD GIVE FARMERS THREE THINGS TO REMEMBER ABOUT CAPITAL GAINS, WHAT WOULD THEY BE? 1. Make sure you have qualifying farm property for the capital gains exemption and eligible farm property for the intergenerational rollover rules. If property is offside, it might be possible to get it back onside, but that takes planning. 2. Keep documents that support your farming history and the cost of the farm assets. Don't get rid of purchase documents, old tax returns, or invoices for major capital improvements just because they are old. 3. Start the succession conversation. It likely will not be completed quickly, but you have to start somewhere. Bring in your accountant, lawyer, and other advisers early. The sooner the family understands what is owned, how it is structured, and what could happen when it is transferred, the more options there are to build a plan that works. • “One of the biggest mistakes is waiting too long to address succession and estate planning. - Kurt Oelschlagel
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