Farm Sale

Seminars are offered by IPC | Pellegrini Financial

You are invited to a SPECIAL Seminar "THE GREAT ESCAPE" Reduce your taxes when selling farm assets. Provided by IPC Investment Corporation/Pellegrini Financial.

 

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With over 25 years providing farm sale and transition advice to clients across Alberta and Saskatchewan, Pellegrini Financial has the experience and expertise that helps you to transition from your farming business, while financially, keeping more in your pocket versus CRA!

To get your FREE Farm Tax Planning report package please click here for details.

THE GREAT ESCAPE!

There are many strategies that can unlock your farm's success for retirement, or build intergenerational opportunities. How do you know which one is right for you? We can help you...

  • understand the best business structure for your farm sale or succession plan.

  • learn how you can retire at a 12% tax rate! 

  • don't lose out on your million-dollar ($1,000,000) lifetime capital gains exemption.

  • how to deal with rented land or land in a corporation?

  • put an end to those never-ending deferral dilemmas!

  • explore financial management, retirement, and estate planning.

 

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the great escape

The Benefits

Profitable and Tax Efficient Exit

Our Team of Advisors are well versed in understanding the tax issues faced by people today.  Whether as individuals, corporate entities, or partnerships, we recognize how assets may be taxed in each of those structures and we have a process ensuring tax efficient methods are employed that make any exit strategy the most profitable to you.   There are numerous tools in the tax act that may allow you to have your taxable income reduced, converted to capital, exempted, deferred into your eventual estate, or in some instances, rolled over to the next generation!  Enormous Tax Savings can be found, if only you take the time to explore those opportunities!

Peace of Mind

The sale of your farm assets is the single biggest transaction, or set of transactions you will complete in your lifetime.It will be comforting to know that you have guidance from people who work through these types of transactions every day.You've got the best team of advisors on your side!

Better Retirement

Retirement is the dream of all, but few take the time to realize that retirement today can last for 25, 30 years or more for the average couple!  While the level of Capital required to fund that retirement will differ between families, our role is to ensure you have the ‘Peace of Mind’ and comfort in knowing your retirement is secure and sustainable until the end!

Family Dynamics

Our years of experience has provided us enormous insight into understanding the relationship and dynamics between family members, recognizing the need for fairness, equality, gifting measures and succession planning; all while recognizing the need for tax efficiency and retirement security.  Our role as a third party voice to family members, is to provide sound and efficient guidance that provides certainty and more importantly, an understanding for all vested parties, as well as the non-vested parties!

 

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Let's look at a quick example. John and Lucy Farmer have been running a family farm operation for a number of years. John has owned his own land and has been farming as a sole proprietor through this time, while Lucy also owned one-quarter section of land rented back to her husband, but has worked off farm throughout this time.

John and Lucy unfortunately encountered an agricultural disaster that resulted in the destruction of his inventory of $700,000.  Government disaster programs provided compensation; however, disaster payments resulted in $1,400,000 of relief.  Of course this relief was also FULLY taxable income!

Our engagement in this situation led us to understand what the objectives were; which was for John looking to continue farming and rebuild his operation, to as it was before disaster struck; while Lucy would continue her career off the farm.  Our planning identified some immediate problems, one being how to deal with $1,400,000 of taxable income and secondly, recognizing that Lucy would not qualify for Lifetime Capital Gain exemption due to income testing provisions in the tax act.

To deal with John’s taxable income, our planning identified that bringing back the operation to pre-disaster status would allow John to expense back his inventory of $700,000 and also expand slightly so an additional $100,000 of inventory replacement was purchased by him directly.  The remaining $600,000 is where we helped John incorporate that income and ensured that he would only pay a 12% Corporate Tax Rate versus a 48% personal tax rate on that excess income amount.  We could defer a net after tax amount of $216,000 for an indefinite period! 

In regards to Lucy, she will retire from her off farm career in two years, but will ultimately be receiving a fully funded defined benefit pension.  The income test provisions will always provide a road block in her ability to access the lifetime capital gain exemption.  We can work around this however, by taking John out of his sole proprietor tax filing and create a family farm partnership between John and Lucy.  This will negate any income testing provisions and after 24 months of being in the partnership, Lucy will be eligible to utilize her lifetime capital gain exemption and be able to exempt her quarter section of farmland that already has a million dollar capital gain attributed on it.  By restructuring the farm business and making Lucy’s quarter section a tax exempt transaction in the future, we found tax savings of $240,000!

These tax planning strategies helped John and Lucy set themselves up for real tax savings today, future tax benefits down the road and allowed them to secure their eventual retirement through our planning and financial management.  That’s advice worth paying for!

 

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Insurance and the Family Farm

Did you know?

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1 in 1200 chance of House Fire

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1 in 240 chance of Catastrophic Car Crash

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1 in 14 chance of individual age 40 dies before 65

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1 in 5 chance of 90 Day+ Disability Claim

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1 in 3 chance of Critical Illness

Succession Planning... Sale Planning? Insurance maybe a critical part of your retirement!

FAQ's

A: No, we are not accountants and we do not file tax returns.  We do however, understand the various tax strategies to deal with farm assets and expect to work with your accountant in order to implement any tax strategies being deployed.

A: No, we do not replace your lawyer.  Once again, we look to work with your other professional advisors including your lawyer to ensure planning strategies are legally sound and documented.

A: There is no straight answer to qualifying for use of the lifetime capital gain exemption, but it is a process we go through to understand and identify for our clients what assets are qualified, who is qualified, or what changes can be made to ensure someone can qualify.

A: We understand that selling the farm business is not something that happens overnight.  We are quite happy to have a sit-down coffee to understand your situation, provide some feedback and allow time to run its course until you are ready.

A: We are committed to building long-term planning relationships with each of our clients and while we might be providing some initial guidance, in time, we expect to help manage your retirement savings.  We will earn advisory fees on the amount of investment assets maintained through our office when that time comes.

 

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Our Locations


Pellegrini Financial

4914 - 55th Street
Red Deer, AB T4N 2J4
Business: 403-347-8833
Fax: 587-273-0035
Toll-Free: 1-800-665-8459
Email: admin@pellegrinifinancial.com