The Rural Voice, 1987-09, Page 76GREY COUNTY Federation of Agriculture NEWSLETTER
446 10th St., Hanover, Ontario N4N 1P9
OFA TORONTO MEETING
Once again it is my turn to report on
the OFA at provincial and county level.
At the July meeting of the OFA in
Toronto on the 22nd there were 11 reso-
lutions discussed. Two were lost, two
referred to committee, one withdrawn,
and the rest carried.
TAX REFORM
A panel discussion on tax reform
was held with Ralph Winslade, farm
business advisor with OMAF, Gerry
Lalonde, senior tax policy advisor, Fi-
nance Canada, and Doug Eckle of Ward
Mallette Chartered Accountants. Many
interesting points were brought out, and
many questions asked by the directors.
Some of Mr. Winslade's concerns
were as follows.
• The reasonable expectation of profit
test has been the basis for the deduction
of any losses from other income. If the
farm is merely a hobby (recreation) and
not a business, no loss deductions are
allowed.
• Losses will be calculated on the modi-
fied accrual basis which takes into ac-
count purchased inventories, accounts
payable, and accounts receivable.
• To deduct any loss from other income
it will be necessary to show a positive
net farm income on the accrual basis in
at least three of the past seven years. I f
loss cannot be deducted from other in-
come it can still be carried back or ahead
against farm income.
• To deduct full losses from other in-
come it will be necessary to be a full-
time farmer. Gross farm income must
exceed net income from all other
sources in at least three out of the past
seven years.
• Restricted losses will apply to part-
time farmers whose gross farm revenues
are less than the net income from other
sources. The restricted loss will be in-
creased to $15,000 from the present
$5,000.
• Start-up rules will allow new farmers a
four-year grace period. However, they
will have to demonstrate the "reason-
able expectation of profit" test. For
general farmers full losses will be al-
lowed in the four-year period. For race
horses, hose breeding, show animals,
and tree farming, only restricted losses
will be allowed in the four-year period.
74 THE RURAL VOICE
519-364-3050
Grey County Federation of Agriculture
All Candidates Meeting
Tuesday, September 1
8 p.m.
Durham Legion
Durham, Ontario
Meet the candidates in the county
Cathy Hird, NDP
Ron Lipsett, Liberal
Bill Murdoch, Progressive Conservative
TAXATION OF QUOTAS
If passed, the ongoing farmer will be
more pleased than the retiring farmer.
The ongoing farmer will notice little
change. It will be possible to depreciate
3/4 of the purchase price of quota at 7 per
cent. This gives about the same tax
deduction as depreciating 1/2 of the
purchase price of quoa at 10 per cent, as
is the case now.
Unfortunately the retiring farmer
receives two strikes — 75 per cent of
sales proceeds of quota less certain
deductions will be taxable. In the past,
1/2 of the proceeds less the same deduc-
tions have been taxable. In addition, if
the vendor held a note or mortgage, the
tax on the quota sale could be spread
over the life of the note. Now, however,
the tax must be calculated in the year of
sale whether cash is received or not.
CAPITAL GAINS
Many farmers may come out ahead
with the changes made to capital gains.
The capital gain exemption for most
citizens will be frozen at$100,000. But
for owners of qualified farm property
the $500,000 capital gain exemption
will remain. No change occurs for prop-
erty owned prior to June 18, 1987.
To attempt to minimize speculation
in land to avoid tax on capital gains,
some tougher rules requiring use in
farming will be introduced for farm land
bought after June 17, 1987. Gross farm
income is supposed to exceed net in-
come from other sources in the two-year
period prior to a sale.
AUTOMOBILE EXPENSES
Business use of personal cars may be
severely tested. This will be controver-
sial. It is proposed that only the first
$20,000 of the value of any new car can
be depreciated. If it is used for less than
90 per cent business then only 20 per
cent of the cost can be depreciated.
IPM IN GREY
The plowing match is in everyone's
mind as mid-September is fast ap-
proaching.
Our Home Beautification Commit-
tee met in Markdale on July 17. This
was the 19th meeting of the committee.
Our banquet and awards night will
be held in Feversham on August 29,
with dress rehearsal the previous night.
Between 500 and 600 people will at-
tend.
The OFA at last has a building for the
plowing match after being let down by
Beaver Lumber. The OFA's building
will be erected by Frey Brothers of
Hawkesville, Ontario. On August 13
there was a seminar for those who will
be staffing our building.
REGIONAL MEETING
The Grey County OFA regional
meeting was August 25 at Annesley
Church in Markdale. Delegates to the
OFA annual meeting in Toronto in
November were elected, as well as new
regional directors for Grey County.
Mr. Keith Buchner, a dairy farmer
from Oxford County and first vice-
president of the OFA, was the speaker.0
Arnold Oliver