Tax tips for Canadian farmers.

When we think about farming, we often think about fields of grains and vegetables, or perhaps cows, chickens, and pigs. But farming includes so much more; from soil tilling to racehorse maintenance, to Christmas tree growing and beekeeping. 

Filing taxes as a Canadian farmer comes with unique considerations, including specific forms, government funding, and claiming farm equipment. Whether you're an experienced farmer or new to the business, knowing the latest tax rules can help you get more deductions.

Here's some things you need to know.

Know your filing deadline.

• Farmers typically follow the same rules and regulations as anyone who is self-employed. As such, your filing deadline is June 16, 2025. However, you must still pay any amount due by April 30, 2025. To avoid late-payment fees, it's best to prepare your tax return before April 30th if you have self-employment income.
• For those farmers who operate as a corporation, the filing deadline is 6 months after your set year-end.

Claiming farm expenses on your tax return.

Farming involves many, MANY expenses – we don’t have to tell you that! But it’s important to track and save every receipt, because most can be claimed on your taxes, such as:

• Seeds and feed
• Fertilizers and pesticides
• Veterinary costs and livestock purchases
• Fuel, oil, and electricity
• Machine repairs and maintenance costs
• Land leases or mortgage interest on farm property
• Repairs and maintenance of farm buildings
• Property taxes and insurance

Get familiar with capital cost allowance.

Bigger ticket items like tractors and combines fall under capital cost allowance, or CCA. This means, you can deduct a portion of the cost of these items annually over time, versus all at once.

We break these into different classes of assets.

• Class 1: Buildings used for farming operations

• Class 8: Machinery and tools, and other general equipment

• Class 10: Motor vehicles

• Class 50: Computers and electronic equipment

The Canada Revenue Agency (CRA) provides an overview of how to calculate these costs. If this seems complicated, a Tax Expert can walk you through how much you can claim.

GST/HST rules apply to farming.

If you made more than $30,000 in farm revenue over the last four quarters, you must register for a GST/HST number. You also need to collect sales tax on taxable goods and services.

You may also be eligible for GST/HST refunds on farm related purchases. This is available through the Input Tax Credit (ITC) program. This usually applies to commercial activities. It includes costs like fuel, delivery charges, maintenance, repairs, vehicle expenses, and utilities.

Government programs and grants.

Quite a few government programs are available to farmers, and most have tax implications.

• AgriStability and AgriInvest. These programs help protect farmers from income fluctuations. Contributions to AgriInvest accounts might also be tax deductible, so speak with your Tax Expert on this.
• Accelerated Investment Incentive. This allows faster depreciation on eligible equipment purchases to help farmers reinvest in their farms.
• Drought, flood, and excessive moisture tax measures for farmers. This applies to livestock lost because of natural conditions (drought, flood). Farmers can exclude a portion of the sale proceeds from their income until the following tax year.
• The Livestock Tax Deferral Provision helps owners of breeding livestock in certain areas. If they must sell some or all their herd because of drought or flooding, they can defer taxes. This applies to part of the income from those sales for one year.
• Provincial programs and temporary measures. Each province has its own rules for farmers. Sometimes, temporary measures are introduced when many farmers face the same problems. Stay aware of these changes. You can also work with your Tax Expert to make sure you don’t miss out.

Tax forms and documents.

Farmers need to fill out forms T2125, For T2042 or Form T2121 when filing their tax returns. Those participating in AgriStability and AgriInvest shouldn’t use Form T2042. Instead, they should use the forms that are related to those programs.

Seasonal workers payments.

If you employ seasonal workers, ensure you keep records of all payments to them. You're required to deduct and remit Canada Pension Plan (CPP), Employment Insurance (EI), and income tax on their pay.

While there are many tax considerations for Canadian farmers. We can help you determine which credits and benefits you qualify for! Visit an H&R Block office near you to speak to a Tax Expert.