Shamus Hennessy, an accountant specializing in farm taxes, is based in Portland, Ontario.
Invest in your farm, hold onto your farm and know that there are no “tricks” as tax laws already favour the farmer
They say there are only two sure things in life: death and taxes. And while no farmer will live forever, one thing the profession has done well over the years is avoid the tax-paying half of the equation.
Farming is a rather unique line of business. No one is farming to make a fast buck: there are far easier and less stressful ways to earn a dollar after all. Rather, agriculture is about building up your land and the capacity of your business to make the most of it. It is a get rich slow scheme, where one lives poor and dies a wealthy man. Almost any and all gain from the farm ends up being poured back into the concern, rather than luxury or indulgence.
Unlike most forms of commerce, farming is uniquely home based: you live where you work, and it becomes very hard to draw the line between life and business. Effectively, almost anything you spend on your farm is a write off: your life and operation are intractable, and whether you’re buying a new truck, upgrading your internet or putting gravel on the driveway, basically everything becomes a business expense.
Thus and therefore, even though operating large and valuable businesses, when it comes time to visit the accountant in late winter, farmers are in a great position to claim very little actual income from which Big Brother can extract his pound of flesh.
At least in my experience, farmers practise an adversarial relationship with the government. Generally suspicious and leery of the powers that be, farmers feel oppressed by regulation, bureaucracy and the vagaries of trade and policy beyond their control. Compared to most western countries, like our American neighbours, or our friends in Great Britain and the European Union, Canadian farmers actually receive very little support and subsidy from any level of government.
Instead of relying on government handouts, Canadian farmers rely on hard work, ingenuity and the unique blessings of our country’s soils and climate. Almost without exception, thanks to glaciation, Canadian farmers farm “new” soil. Unlike our counterparts in other parts of the world: where their soils have been weathered and leached and eroded for millions of years, Canadian farmers farm on freshly crushed rocks and recently deposited lake beds.
And despite our northerly latitude, during our brief growing season we have some of the best climatic conditions for everything from lentils, to wheat, to soybeans: even apples and forages. Long summer days, an abundance of water and moderate temperatures make plants very happy up here for a handful of months a year, and our careful breeding of livestock has made Canadian genetics some of the best in the world.
And so, the Canadian farmer thrives and prospers despite it all. And because no good deed goes unpunished, we must sit down with our accountant and figure out how we are going to pay the piper. I think that Canadian farmers might be more enthusiastic about paying taxes if they felt the money was going to good use. When you deal with the hard truths of business and material reality 365 days of the year, many of the initiatives and spending the powers that be prioritize ruffle the feathers of such practical people.
The byzantine nature of the tax code means that almost all of us hire out the nitty gritty of tax filing to an accountant. This is certainly a problem I’m happy to throw money at, rather than tackle myself. My wife Morgan takes care of all of our bookkeeping, so we have a pretty good handle on the business, but when it comes to optimizing the numbers on the bottom line, we assign that to a professional. As the saying goes, a good accountant pays for themselves.
As farmers, it’s easy to understand following in your father’s footsteps: Shamus Hennessy knows all about it. Based on a quiet backroad outside of Portland, Ontario, Shamus is a third-generation accountant. James Senior, James Junior, and now Shamus (which is really just James in Old Irish) have been helping farmers hold onto as much of their hard-earned money as possible since 1978.
At 28, Shamus brings youthful energy to what we would normally consider to be a stodgy profession. He’s no rookie, mind you: he’s been studying the craft his whole life and knew at a young age that he wanted to be a “Taxmiser” like his father and his father before him. Although he files for all sorts of individuals and businesses, Shamus is fairly unique in still specializing in farm taxes. “There’s fewer of you guys every year,” he grimaces.
Shamus Hennessy knew at a young age that he wanted to be a “Taxmiser” like his father and his father before him.
Shamus reckons he represents about 1 % of Ontario’s dairy farmers and admits that going out to visit them is the best part of his job. His extensive experience working with farmers has given him a broad and deep appreciation of the trade, and he even does a bit himself: Shamus is an apiarist, so you can buy some honey when you drop off your year’s worth of records and receipts.
I asked Mr. Hennessy what advice he would give farmers when it comes to taxes: his guidance was very simple.
1) Hire a professional. Tax law for farming is significantly different from regular business and personal taxes. Having an accountant who knows the ins and outs of farm taxes will pay for itself quickly.
2) Invest in your farm as much as possible. These expenses will offset income, putting dollars into the health and future of your farm rather than government coffers. Money spent on the farm will increase your quality of life, make your farm more efficient and productive, and of course, increase its value.
3) Hold onto your farm! Farming has become such a capital intensive, high stakes business that it is almost impossible to enter the industry. Do what you have to do to keep the farm in your family, because once it’s gone, you will have a very hard time getting it back. In this case, taking advantage of the capital gains exceptions for agriculture means that passing on the farm to the next generation can be done tax free.
4) If you do decide to sell the Bonanza, make sure you have an accountant involved to help navigate the tax laws regarding capital gains as well: as a farmer, you will hold onto much more of your money than any other party would in selling such a valuable asset.
Being a straight shooter, Shamus didn’t have any “tricks” to pass on. The reality is that tax laws are actually already so favourable to farmers, that there’s really no reason to game the system. After all, for those with the problem of having too much money, starting some sort of farming operation is a great way create a tax haven, and turn excess cash into hard assets like land and equipment.
So, if you don’t want the government getting your money, spend it on farming. Fortunately, this comes very easily to a farmer. Your wife will love to hear that you’re going to put off that kitchen upgrade for another season, and that you need to buy a tractor instead!
In my mind, perhaps the most poignant issue around taxes and farming is to keep the normies from finding out how little taxes farmers actually pay. In the public mind, most people still think of agriculturalists as the poor dirt farmers of generations past. If they learn that contemporary farmers are steadily getting rich on paper with ever and ever greater equity in their land, quotas and equipment AND not paying much in the way of income taxes, you may see a quick erosion of public sympathy for the plight of tillers of the soil.
I suppose if anyone deserves a break from the taxman, it would be farmers. The toil, stress, risk and paper-thin margins are a tax in-and-of themselves. The fundamental importance of food production goes without saying, not to mention that Canadian farmers compete against the entire world for market share and a place on your plates.
Although none of us signed the Social Contract — we were just born into it — it remains important to work together and make sacrifices. Roads, schools, healthcare all come at a cost, but so does having a food supply so abundant that our ancestors could never begin to fathom it. Limiting taxes on Canadian farmers not only helps maintain rural communities, it provides us a safe, affordable and reliable food supply that all Canadians benefit from.
Charles Summers owns Salt of the Earth Farm, a direct-to-consumer operation selling vegetables at the roadside, near Lyndhurst, Ontario.
TIPS FROM THE TAXMISER — Farmers already have it so good
Shamus Hennessy, an accountant specializing in farm taxes, is based in Portland, Ontario.
Invest in your farm, hold onto your farm and know that there are no “tricks” as tax laws already favour the farmer
They say there are only two sure things in life: death and taxes. And while no farmer will live forever, one thing the profession has done well over the years is avoid the tax-paying half of the equation.
Unlike most forms of commerce, farming is uniquely home based: you live where you work, and it becomes very hard to draw the line between life and business. Effectively, almost anything you spend on your farm is a write off: your life and operation are intractable, and whether you’re buying a new truck, upgrading your internet or putting gravel on the driveway, basically everything becomes a business expense.
Thus and therefore, even though operating large and valuable businesses, when it comes time to visit the accountant in late winter, farmers are in a great position to claim very little actual income from which Big Brother can extract his pound of flesh.
At least in my experience, farmers practise an adversarial relationship with the government. Generally suspicious and leery of the powers that be, farmers feel oppressed by regulation, bureaucracy and the vagaries of trade and policy beyond their control. Compared to most western countries, like our American neighbours, or our friends in Great Britain and the European Union, Canadian farmers actually receive very little support and subsidy from any level of government.
Instead of relying on government handouts, Canadian farmers rely on hard work, ingenuity and the unique blessings of our country’s soils and climate. Almost without exception, thanks to glaciation, Canadian farmers farm “new” soil. Unlike our counterparts in other parts of the world: where their soils have been weathered and leached and eroded for millions of years, Canadian farmers farm on freshly crushed rocks and recently deposited lake beds.
And despite our northerly latitude, during our brief growing season we have some of the best climatic conditions for everything from lentils, to wheat, to soybeans: even apples and forages. Long summer days, an abundance of water and moderate temperatures make plants very happy up here for a handful of months a year, and our careful breeding of livestock has made Canadian genetics some of the best in the world.
And so, the Canadian farmer thrives and prospers despite it all. And because no good deed goes unpunished, we must sit down with our accountant and figure out how we are going to pay the piper. I think that Canadian farmers might be more enthusiastic about paying taxes if they felt the money was going to good use. When you deal with the hard truths of business and material reality 365 days of the year, many of the initiatives and spending the powers that be prioritize ruffle the feathers of such practical people.
The byzantine nature of the tax code means that almost all of us hire out the nitty gritty of tax filing to an accountant. This is certainly a problem I’m happy to throw money at, rather than tackle myself. My wife Morgan takes care of all of our bookkeeping, so we have a pretty good handle on the business, but when it comes to optimizing the numbers on the bottom line, we assign that to a professional. As the saying goes, a good accountant pays for themselves.
As farmers, it’s easy to understand following in your father’s footsteps: Shamus Hennessy knows all about it. Based on a quiet backroad outside of Portland, Ontario, Shamus is a third-generation accountant. James Senior, James Junior, and now Shamus (which is really just James in Old Irish) have been helping farmers hold onto as much of their hard-earned money as possible since 1978.
At 28, Shamus brings youthful energy to what we would normally consider to be a stodgy profession. He’s no rookie, mind you: he’s been studying the craft his whole life and knew at a young age that he wanted to be a “Taxmiser” like his father and his father before him. Although he files for all sorts of individuals and businesses, Shamus is fairly unique in still specializing in farm taxes. “There’s fewer of you guys every year,” he grimaces.
Shamus Hennessy knew at a young age that he wanted to be a “Taxmiser” like his father and his father before him.
Shamus reckons he represents about 1 % of Ontario’s dairy farmers and admits that going out to visit them is the best part of his job. His extensive experience working with farmers has given him a broad and deep appreciation of the trade, and he even does a bit himself: Shamus is an apiarist, so you can buy some honey when you drop off your year’s worth of records and receipts.
I asked Mr. Hennessy what advice he would give farmers when it comes to taxes: his guidance was very simple.
1) Hire a professional. Tax law for farming is significantly different from regular business and personal taxes. Having an accountant who knows the ins and outs of farm taxes will pay for itself quickly.
2) Invest in your farm as much as possible. These expenses will offset income, putting dollars into the health and future of your farm rather than government coffers. Money spent on the farm will increase your quality of life, make your farm more efficient and productive, and of course, increase its value.
3) Hold onto your farm! Farming has become such a capital intensive, high stakes business that it is almost impossible to enter the industry. Do what you have to do to keep the farm in your family, because once it’s gone, you will have a very hard time getting it back. In this case, taking advantage of the capital gains exceptions for agriculture means that passing on the farm to the next generation can be done tax free.
4) If you do decide to sell the Bonanza, make sure you have an accountant involved to help navigate the tax laws regarding capital gains as well: as a farmer, you will hold onto much more of your money than any other party would in selling such a valuable asset.
Being a straight shooter, Shamus didn’t have any “tricks” to pass on. The reality is that tax laws are actually already so favourable to farmers, that there’s really no reason to game the system. After all, for those with the problem of having too much money, starting some sort of farming operation is a great way create a tax haven, and turn excess cash into hard assets like land and equipment.
So, if you don’t want the government getting your money, spend it on farming. Fortunately, this comes very easily to a farmer. Your wife will love to hear that you’re going to put off that kitchen upgrade for another season, and that you need to buy a tractor instead!
In my mind, perhaps the most poignant issue around taxes and farming is to keep the normies from finding out how little taxes farmers actually pay. In the public mind, most people still think of agriculturalists as the poor dirt farmers of generations past. If they learn that contemporary farmers are steadily getting rich on paper with ever and ever greater equity in their land, quotas and equipment AND not paying much in the way of income taxes, you may see a quick erosion of public sympathy for the plight of tillers of the soil.
I suppose if anyone deserves a break from the taxman, it would be farmers. The toil, stress, risk and paper-thin margins are a tax in-and-of themselves. The fundamental importance of food production goes without saying, not to mention that Canadian farmers compete against the entire world for market share and a place on your plates.
Although none of us signed the Social Contract — we were just born into it — it remains important to work together and make sacrifices. Roads, schools, healthcare all come at a cost, but so does having a food supply so abundant that our ancestors could never begin to fathom it. Limiting taxes on Canadian farmers not only helps maintain rural communities, it provides us a safe, affordable and reliable food supply that all Canadians benefit from.
Charles Summers owns Salt of the Earth Farm, a direct-to-consumer operation selling vegetables at the roadside, near Lyndhurst, Ontario.