Don’t Bet the Family Farm…Without Professionals

In Grey Bruce Family Farm BusinessBruce County alone, 62% of the land is dedicated to the agriculture industry with 63% of farms being family-owned. Over $255 million in gross sales annually is generated by 3,750 different farm operators.

Incorporating a family farm can most certainly bring real benefits to both the estate’s planning and to the taxation rate of the property. However, there are many legal and financial issues that must be reviewed before the family farm owner can choose to incorporate the property.

Anyone thinking of incorporating their farm should sit down with their lawyer and accountant and determine if their family farm is suited to becoming incorporated. While it is a complicated process there are financial advantages, such as, incorporation creates a new entity with which can property can be owned and money can be borrowed.

If the farm is sued or if there is a loss the amount to be paid is limited to the assets of the corporation and your personal assets are no longer at risk.Furthermore, it limits personal liability. If the farm is sued or if there is a loss the amount to be paid is limited to the assets of the corporation and your personal assets are no longer at risk.

It also allows for lower taxes. In Ontario there is a $400,000 small business tax incentive which is a tax deferment which allows you to leave money in the farm and it is only taxed when you take it out of the corporation. This allows more money to purchase new machinery and upgrade the farm.

If you incorporate there is share ownership, which is easier for estate planning. Incorporating also allows income splitting to various family members by giving shares or putting them on the corporation’s payroll. In estate planning it allows for the transfer to the next generation through shares over time and CMA facilitate tax planning.

The disadvantage is that you usually incur more costs. Most individuals hire a lawyer and an accountant to complete the work necessary to incorporate and to maintain the corporation.Grey Bruce Family Farm Business

Articles need to be filed to incorporate and the Minute Book needs to be maintained. The corporation will also have to file an income tax return each year.

There is increased bureaucracy, as you will have to file paperwork with the corporation. You would become an employee of the corporation and will have to make payroll remittances.

It is very important to determine if you have utilized the capital gain exemption that each farmer has and if you have not reached the $750,000 limit that could be an issue that would really be a disadvantage as to incorporate.

Incorporating has benefits, however the legal and financial issues should always be considered before making complex business decisions, especially incorporating a family farm. More detail to follow in a further article on the issue of capital gain exemption.

Written by Mike Forcier

Michael ForMike Forciercier is a member of the Upper Canada Law Society and was called to the Bar in 1986.  He completed his undergraduate studies at the University of Toronto in Economics and he obtained his law degree from Windsor Law School.  He relocated to Owen Sound in 1991 and has practiced law in the Grey/Bruce Counties since then.

In the past Michael has presented papers at Canadian Bar Association meetings as well as Ontario Bar Association seminars.  He has taught the Estate Law Clerks course at Georgian College.

Mike can be reached at:



Learn to Network

Business Networking International (BNI) Sound Networking meets Each Wednesday 7:00 – 8:30 AM at Frog Ponds Cafe

Meet local business people and find out how networking is one of the most effective methods for marketing your business.
Visitors are always welcome, just call ahead to let us know you are coming 519-371-2622.

Business Enterprise Centre Workshops

Basics of Bookkeeping (Three part workshop)
Tuesday September 19th and 26th and Tuesday October 3rd, 6:30 pm – 9:30 pm
Business Enterprise Centre Training Room $95 (HST included)
Facilitator: Jane Gallagher
This three part Bookkeeping Workshop will allow you to use the tools and information to confidently understand your financial statements and your own books. Class size is limited to 8 to allow a hands-on, individual learning opportunity for everyone.

Business Enterprise Centre Workshops

How to “Really” Start a Business
Wednesday September 20th, 9:00 am – 11:30 am, Bayshore Community Centre
FREE – Pre-registration is required
Facilitator: Cliff Bilyea
Discover the basic steps involved in starting a business, evaluating your idea, determining your market and basic rules and regulations. Attending the is workshop is mandatory for anyone applying to the Starter Company Plus Program.

Business Enterprise Centre Workshops

Introduction to Quick Books (Two part workshop)
Tuesday October 17th and 24th, 6:30 pm – 9:30 pm
Business Enterprise Centre Training Room, $80 (HST Included)
Instructor: Jane Gallagher
The first session of Quick Books provides participants with an overview and access to a trial version of the program. The second session will be questions and answers to address specific issues. Knowledge of basic bookkeeping principles is required. Limited to 8, you must bring your own laptop. (This workshop does not cover the online version of Quick Books)


Phone: 519 371 7464
Fax: 519 371 4043
Address: 1240 2nd Ave E
Owen Sound, ON N4K 2J3

Subscribe to Our Newsletter