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The Rural Voice, 1979-06, Page 41Guest column Joint farm ownership has tax benefits BY DONALD SHAUGHNESSY, CA About half the farms in Ontario are jointly owned by husband and wife. Many of the joint owners, who purchased their farms before 1972, do not realize the enormous tax benefits they can realize when they sell their farms. Since 1972. when capital gains' tax was introduced, the law works like this: if you give assets - say half the farm - to your spouse, any capital gain which arises when that asset is sold will be taxed as if it was all received by one person. It does not affect the tax if you gave half the farm to your spouse. But this rule does not apply if you gave half the farm to your spouse before 1972. If this is the case with your farm, treat it seriously; you can save a lot of tax money. There is a good chance that a farmer, being accustomed to reporting all farm income as if it had all been received by one person, might report the capital gain, on the sale of the farm, as if it too had been received by just one person. This is not necessary however, if the farm was owned by husband and wife before 1972. In such cases, the capital gain, arising from the sale of the farm, can be split between husband and wife - reducing the total capital gains tax to be paid. Most important: if the capital gain is split, future income earned when the money received for the farm is invested, can also be divided between husband and wife. The possible tax saving is consider- able. An example: Farmer Smith and his wife purchased their farm for $30,000 in 1950. In 1971, the value was $200,000. They ;ell it in 1979 for $350,000. The gain, since 1972, is $150,000 and it would all be taxable as a capital gain. If paid by one person, the total tax would be about $30,000 (in average circumstances but if it were split between husband and wife, the total tax would more likely be about $20,000 - a saving of S10,000. Now, if the proceeds of the sale are invested by a retired couple at a safe 9 or 10 per cent, it might produce an income of $32,000 per year. Income tax would amount to about $9,000 if the income is taxed as if it were received by just one person. But splitting the income between hus- band and wife would put each in a lower tax bracket, and the total tax would probably amount to no more than S6,000. If you have already sold your farm, it may not be too late to realize these tax advantages, since the government usually allows you to adjust your taxes for the four preceding years. Acting quickly can earn you a big tax refund. (Mr. Shaughnessy is with G.H. Ward & Partners, Cobourg.) Farmers are growing more barley Ontario farmers are growirg more barley than they did 20 years ago. :.ii( .i's mainly because of the stem of new varieties, says Dr. r..:,ie R .!inbergs, Ontario Agricultural College cereal breed- er. "Twenty years ago, the number of pure stands of barley was negligible," he says. "Varieties available then had weaker straw and were not resistant to disease. Under those conditions, the crop couldn't com- pete with more profitable crops." These old varieties are gradually being phased out of production in favor of new varieties, bred especially for Ontario conditions. "In the past 10 years, six new barley cultivators—Trent, Vanier, Perth, Huron, Bruce, and Massey—have been released to Ontario growers by breeding stations at Guelph and Ottawa," says Dr. Reinbergs. These new varieties, together with better cultural practices, have resulted in a steady increase in the province's barley acreage. Although mixed grain acreage has not changed in the past 30 years, barley acreage has increased four times. The average yield has increased by 60 per cent. Dr. Reinbergs anticipates Ontario farm- ers will plant as much or slightly more barley this spring as last year. However, continued breeding research is necessary to maintain the level of Ontario barley production. Ag engineer, your local building consultant The agricultural engineer, working for the Ontario Ministry of Agriculture and Food, is truly a farm building consultant. The typical agricultural engineer grew up on a farm, and took specialized training at college, in agriculture and engineering. These engineers are willing to consult with farmers, study their operations, and help them determine the best type and size of building to meet their needs. They do basically the same things for farmers that architects or engineers do for companies erecting large commercial buildings. Following consultation, the agricultural engineer will prepare a complete plan for the proposed building from the stock supply, or will design and draw a new building plan, to meet the needs of the farmer. The plan will be structurally designed to conform to the Ontario Building Code and the Canadian Code for Farm Buildings. When farmers use these plans, they can ask all builders to bid on the same project. They can truly compare prices, and know what they are getting. By comparison, when a farmer asks each different builder to bid on a building of the bidder's own design, it is difficult to compare buildings and prices. One builder will include features that another omits. The farmer may have too many expect- ations and be disappointed. On most farms, more than just a new building is needed. The agricultural engin- eer is able to advise on manure systems, ventilation, feed storage and processing, and animal handling. All of these things are a part of the system. and can be designed into a new building. Other things to be considered are wind and snow problems, existing buildings and lanFways, future expansion, possible air and water pollution, and labor require- ments. Buying a nev4 building is different from buying a new car or tractor. These can be traded after several years if they are not satisfactory. But it is difficult, and costly, to try to correct problems in a building after it is up. It is better to plan the building properly, and then build it. There is no charge for the professional consultation and advice of the agricultural engineer. It is a service provided to farmers by the Ontario Ministry of Agri- culture and Food, so farmers may obtain plans and advice for structurally sound. well-designed buildings. The agricultural engineers' services can be obtained through the agricultural office in your county, region or district. THE RURAL VOICE/JUNE 1979 PG. 39