In this episode of Financial Planning for Canadian Business Owners, Jason Pereira, award-winning financial planner, university lecturer, and writer, interviews Dane ZoBell, Partner of Felesky Flynn, where he specializes in farm sales and estate planning!
Episode Highlights:
- 1:16 – Dane ZoBell introduces himself and what he does.
- 1:55 – Dane discusses how farms differ from other assets.
- 3:32 – How does estate planning for farms differ compared to other businesses?
- 5:30 – Dane breaks down the benefits of the Income Tax Act, specifically in regard to farm properties.
- 7:45 – Jason and Dane discuss the Capital Gains Deduction for qualified farm property.
- 13:53 – How much of Dane’s planning is around estate freezes and multiplication of that exemption?
- 16:41 – Dane explains the Intergenerational Rollover provision laid out in the Income Tax Act.
- 20:54 – When does it make sense to use the Intergenerational Rollover provision instead of the Capital Gains Deduction?
- 26:03 – What does the sale of a family farm look like for the next generation?
- 28:10 – Jason and Dane discuss the rules for farmers and younger generations when it comes to estate/sale planning.
- 32:00 – What are the biggest challenges that Dane faces with farm planning?
- 36:40 – Dane recaps what’s important to know when it comes to farm planning.
3 Key Points
- Land that is owned personally, partnerships interest, and shares of a qualified farm corporation could all qualify for the Capital Gains Deduction.
- A big issue that faces farmers right now is that the value of the land has surpassed the shelter provided by the Capital Gains Deduction by a long shot.
- Generations that inherit property as a gift are not allowed to take advantage of the Capital Gains deduction until they have owned the property for at least 3 years.
Tweetable Quotes:
- “Not many other things get passed along over centuries...We might be talking about the 1st generation on a farm or we might be talking about the 6th generation on a farm.” – Jason Pereira
- “The problem these days, with the price of farmland having gone up substantially...the capital gain often will be greater than the capital gains deduction that we have.” – Dane ZoBell
- “If you’re transferring the land down to a subsequent generation, the objective is always to try to bump up the cost–base of that land.” – Dane ZoBell
- “No one likes paying taxes. Let’s be honest...You’re going to do it through gritted teeth.” – Jason Pereira
- “When it comes down to land owned personally, the general rule is once qualified always qualified for the Capital Gains Deduction.” – Dane ZoBell
Resources Mentioned:
Transcript
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