The Rural Voice, 1986-06, Page 691
Spicer MacGillivray
Chartered Accountant.
LISTOWEL 291.1251
Partners
M.J. Hoyles, C.A.
N. MacDonald Exel, C.A.
Manager
L. M. Gagnon, C.A
GODERICH 524.2677
Partner
R.E. Takalo, C.A.
Manager
R.M Kaufman, C.A.
SCOTT'S
INDUSTRIAL
Et FARM SUPPLY
• Westward Tools
• Keto Abrasives
• Sandpaper & Discs for Bodywork
• Epps Pressure Washers
ALL GRADES OF
NUTS ft BOLTS
RR #4 Tara 519.376.0283
8 mi. W. of Owen Sound off Hwy 21
(Con. 10.11 Derby)
Smyth 350 Bu.
Grain Buggy
• 18.5 x 22.5 Tires
• 3" spindles
• 12" auger — 14' high
• 21/2" x 16" cylinder on
auger shut-off
• 3" x 8" cylinder on folding
auger
George Smyth Welding
& Machine Shop Ltd.
Smyth 500 Gal.
Sprayer
• Heavy duty draw hitch
• Wheels adjust from 60" to
90" centres
• 11L x 15 tires • 2" spindles
• Wheels swivel for
cultivating or discing
• Wheels lock for row crop
R.R. 2, AUBURN, ONT., NOM 1E0
519-529-7212
68 THE RURAL VOICE
ADVICE
Formal agreement
for family business
Partnerships — especially be-
tween parent and child, or among
children — have always been a
common way of operating a farm
business.
Much less common is a farmer -
spouse partnership, though these
are now becoming more popular.
In both types of partnership the
farm is run jointly, with the part-
ners sharing the profits and losses
either equally or according to an
agreed formula.
Although a valid partnership
may exist without a written agree-
ment, it's always better to have one
— especially where husband and
wife are concerned. And have this
done professionally.
The tax court recently held that
because there was no formal writ-
ten agreement between a farmer
and his spouse, the partnership
was not valid — even though the
spouse performed farm duties and
had brought capital into the
business.
Although a farm partnership is
considered to be a separate "per-
son," a tax return doesn't have to
be filed for the partnership itself.
What happens is that a statement
of income and expenses is prepared
for the partnership. Then each
partner must file a tax return
reporting his or her share of the in-
come or loss.
Where use of a partnership pro-
perty is involved — an automobile
for example — then the personal
portion of such use is a taxable
benefit to the partner concerned,
and must also be included in in-
come.
A partnership, like any other
business, is allowed to choose a
year-end other than the calendar
year; it can also elect to use the
cash basis of computing income.
Income averaging provisions, in-
cluding the five-year block averag-
ing, are not available to a partner-
ship. But they are available to each
partner individually. Similarly,
loss carry overs and restricted farm
losses cannot be used by a partner-
ship — only by the partners as in-
dividuals.
On the other hand, capital cost
allowance on depreciable property
used by the partnership can only be
claimed by the partnership. And if