The Rural Voice, 1989-01, Page 38BARFOOTS WELDING
AND
MACHINE SHOP
Now available – Snowblowers
manufactured in our own shop
as well as a full line of Hagedorn
equipment • Hydraulic parts and
repairs • Parts for many makes
of farm equipment
Wiarton, Ont.
519-534-1200
Snowblowers
+ Buy Quality!
Buy Canadian &
Save
C 0 ■ 0 P Savings, Service
8c
Quality Products
from
Your Locally Owned Co-operative
WINTER CASH SPECIALS
NOW IN EFFECT
Bagged and Bulk Fertilizer
Seed grains (seed in short supply)
Cash discounts
Early delivery discounts
TEESWATER DISTRICT CO-OPERTATIVE
Teeswater 519-392-6862
LUCKNOW DISTRICT CO-OPERATIVE
Lucknow 519-529-7953 Ripley 519-395-3654
NORTH WELLINGTON CO-OPERATIVE SERVICES
Harriston 519-338-2331 Mount Forest 519-323-1271
36 THE RURAL VOICE
ADVICE
MAKE THE MOST
OF TAX RULES
Farmers who prepare their books
before their year end will be able to es-
timate their tax position and plan their
business accordingly.
If you are taxable, here are some
ways to reduce your tax liability:
• Pay off accounts payable. They are
not expenses until paid off — why miss
out on 100 per cent deductions?
• Consider holding some crop in
storage to sell next year. Holding onto
inventory reduces your gross income
and leaves expenses at a higher level.
• Look into forward purchasing
some of next year's supplies, but make
sure price and tax savings outweigh the
cost of holding extra inventory.
• Make sure you record all farm
expenses. Those small cash purchases
of farm items add up. Why pay tax on
money that went into farm expenses?
• Consider replacing equipment, but
only if you would have replaced it soon
anyway. Tax rules allow you to claim
half of the capital cost allowance in the
year you buy an item. But it doesn't
make sense to buy equipment that won't
generate more net income. Why spend
a buck to generate 50 cents of income?
• Consider deductions that build for
retirement (Canada Pension, RRSPs).
• Take a look at the five-year block
averaging provision. It can reduce your
tax payable by allowing you to average
low-income years with a high-income
year. Starting in 1987, farmers are al-
lowed to take on more block average
from 1987 to 1991. The averaging pe-
riod includes the year the average is
taken and four of the six preceding
years. You must have filed your income
tax on time (before April 30) in each of
the years you want in the average.
If you are in a non-taxable position:
• Increase livestock inventory. By
building up income in a loss year, you
can contribute to Canada Pension and
avoid some tax in a more profitable year.
• Don't claim maximum CCA. Save
deductions for a more profitable year.
If you're taxable, your goal is to
reduce tax paid, not eliminate it. But
you could reduce the tax significantly.0
Dave Rose
Farm Management Specialist