AE 210 - Farm Taxation & Succession Planning

3 Credits

The main features of income taxation for farm businesses. Also covers business organizations and estate planning including tax implications.

Rationale:

This is a required course for the Agribusiness diploma students. The taxation of farm income and related topics are explored such that, with the aid of tax consultants, management strategies can be chosen for tax planning, estate planning, and organizing the farm business to maximize after-tax income.

Prerequisites: AC 118 , AE 202  
Corequisites: None

Course Learning Outcomes:
Upon successful completion of this course, students will be able to

1. do the basic calculations of taxable income and tax liability.
2. understand the implications of a number of tax minimizing strategies.
3. understand how to organize your business and personal affairs to facilitate the achievement of management objectives including tax planning.
4. start the process of estate planning and understand some of the tools of estate planning.

General tax guide (for the current year). Canada Customs and Revenue Agency.

Farming income tax guide (for the current year). Canada Customs and Revenue Agency.

Optional Resource Materials:
None

Conduct of Course:

This course consists of approximately 42 hours of lecture periods. The standard procedure for each topic in the course is as follows: A hand out giving the basic concepts is made available for individual study, a lecture to explain the concepts in class, an example using the concepts will be worked through in class, an assignment for individual practice with some class time available.

Classroom and laboratory attendance is considered vital to the learning process and as significant to the students’ evaluations as examinations and reports. Therefore, absenteeism is recorded.

1. Students having an inexcusable absence of 10 percent or higher for the scheduled course hours are required to withdraw and automatically receive a “RW” (required to withdraw) grade for the course, regardless of any other evaluation results.
2. Students having a combination of excused and inexcusable absences of 20 percent or higher for the scheduled course hours do not pass the course.
3. An excused absence is one that is verified with your instructor. Verification may be prior to the absence or the next class day following the absence. Verification of the absence may take the form of a note from your doctor/College nurse regarding illness, or a note from another instructor regarding a field trip or other activity, or authorization by your instructor.

It is the students’ responsibility to know their own absentee records.

Content of Course:

A.  Farm Income and Expenses for Tax Purposes

Farm Income

Farm Expense

Inventory

Capital Cost Allowance

B.  Income Tax for Farms

Total Tax Income

Net Tax Income

Taxable Income

Net Tax Payable

C.  Special Topics in Income Tax

Alternate Minimum Tax (AMT)

Year End

Strategies

Cash versus accrual

Filing, appeals, etc.

D.  Business Organization

Sole Proprietorships

Partnerships

Joint Ventures

Corporation

E.   Capital Budgeting

Tax deductible expenses

Capital Cost Allowance (CCA)

Terminal loss and recaptured CCA

F.   Estate Planning

Objectives

Basic steps

Investment Income

Property Transfers

Family Farm Rollover

Trusts 

Capital Gains Reserves

Timing

Bank Accounts

Life Insurance and RRSP’s

Types of Ownership

Who Must Be Legally Provided For

Wills

Course Assessments:
 

*In order to successfully complete this course, all assignments must be completed and handed in. These assignments are evaluated on three criteria in addition to content as follows:

1. Assignments must be handed in on time.
2. Assignments must be complete.
3. Assignments must be neat.