Why now is the time to get tax info in order

The start of a new year signals an opportune time to begin organizing and planning tax information for 2018.

A detailed inventory list should be put together as soon as possible as this only gets harder the longer you wait, says Kimberly Shipley of MNP’s agricultural services.

“If you are in AgriStability, having production information summarized is easier to do close to the year-end than trying to figure it out later in the year,” Shipley adds.

Late starters

Joel Bokenfohr, manager of business structures and financial policy with Alberta Agriculture, advises farmers start with a record-keeping check.

They should ensure they’ve made accurate records of all past revenues, expenses, equipment purchases and sales, and in a format that’s usable for their advisers, he says.

Producers also need precise records of cash advances, deferrals, paid wages, and how they’ve chosen to split income.

“WCB reporting is due at the end of February, and is easier to file at the same time you file T4s,” adds Shipley.

Accrued statements

Although most operations are taxed on a cash basis, Bokenfohr encourages farmers to work with their accountants and advisers to develop accrued statements for use in making future decisions.

“If you are providing accrual information to your bank, use the January and February information to find the amounts you collected and paid that year and that related to the previous tax year,” adds Shipley.

Constructing a true financial picture of the business, including debt-to-service ratios, can assist in working with farmers’ lenders.

Benchmarking their performance will also help set goals to achieve, Bokenfohr says.

He recommends producers meet with their advisors now to review their long-term business plans.

“Consult them on some of the key questions on how can they get some of their ratios to improve, and where they’re at with their farm: are they planning in the next five years to expand, or are they planning to move on their succession plan?”

Bottom line

Get organized now to construct a true financial picture of your farm, focus your business plans and help with 2018 tax filings. 

Article by: Richard Kamchen