Farming Income and the CAIS Program Harmonized Guide 2005

RC4408(E) Rev.05

For CAIS program participants in British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Yukon.

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This guide uses plain language to explain the most common tax situations. If you need more information about farming activities, call 1-800-367-8506.

In this publication, we use the name "Canada Revenue Agency" and the acronym "CRA" to represent the Canada Customs and Revenue Agency. This reflects changes in the structure of the Agency.

Table of Contents

• What's New for 2005?
• Before You Start
  • What is the CAIS program?
  • Is this guide for you?
  • Forms and publications
  • Penalties
• Chapter 1 - General Information
  • What is farming income?
  • How do you report your farming income?
  • Business records
  • Instalment payments
  • Dates to remember
  • CAIS program deadlines
  • Goods and services tax/harmonized sales tax (GST/HST) registration
  • Reporting partnership income
• Chapter 2 - Your CAIS program
  • Who is eligible?
  • Participating in the CAIS program
  • Form T1273, Statement A - Harmonized CAIS Program Information and Statement of Farming Activities for Individuals
  • Form T1274, Statement B - Harmonized CAIS Program Information and Statement of Farming Activities for Additional Farming Operations
  • Completing the forms
• Chapter 3 - Calculating Your Farming Income or Loss
  • Payment in kind
  • Section 4: Income
  • Income from program payments
  • Other farming income
  • Summary of income
  • Section 5: Expenses
  • Commodity purchases
  • CAIS program - Allowable expenses
  • CAIS program - Non-allowable expenses
  • Section 6: Summary of income and expenses
  • Partnership information chart
• Chapter 4 - Inventories, Purchased Inputs, Deferrals, Receivables and Payables
  • Completing your CAIS forms:
  • Section 7: Crop Inventory Valuation
  • Section 8: Livestock Inventory Valuation
  • Additional livestock information
  • Section 9: Other Information
  • Part A: Purchased Inputs Valuation
  • Part B: Deferred Income and Receivables
  • Part C: Accounts Payable
• Chapter 5 - Capital Cost Allowance (CCA)
  • What is CCA?
  • How much CCA can you claim?
  • Form T1175, Farming - Calculation of Capital Cost Allowance (CCA) and Business-Use-of-Home Expenses
  • Classes of depreciable property
  • Special situations
• Chapter 6 - Eligible Capital Expenditures
  • What is an eligible capital expenditure?
  • What is an annual allowance?
  • What is a cumulative eligible capital (CEC) account?
  • How to calculate your annual allowance
  • Sale of eligible capital property - Fiscal period ending in 2005
  • Farming income from the sale of eligible capital property eligible for the capital gains deduction
  • Replacement property
• Chapter 7 - Farm Losses
  • Fully deductible farm losses
  • Partly deductible losses (restricted farm losses)
  • Non-deductible farm losses
• Chapter 8 - Capital Gains
  • What is a capital gain?
  • What is a capital loss?
  • Definitions
  • How to calculate your capital gain or loss
  • Restricted farm losses
  • Qualified farm property and cumulative capital gains deduction
  • Transfer of farm property to a child
  • Transfer of farm property to a spouse or common-law partner
  • Other special rules
• Commodity List
• Program Payment Lists
• Inventory Code List A
• Inventory Code List B
• Regional Code List
• Units of Measurement Code List
• Expense Code List
• Capital Cost Allowance (CCA) Rates
• How to Calculate the Mandatory Inventory Adjustment (MIA) Adjustment (MIA)
• GST/HST Rates
• Index
• Your opinion counts!

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