I know here..there were a few things in order to get the tax deductions for a farm.
you had to PROVE that you had $10,000 worth of sales in the last tax season (so for the year you are filing for) Lets say I was trying to claim an egg farm. my sales could be anything relating to chickens or eggs.
feed, eggs, chickens, nest boxes, consulting fees* (you must have post secondary education or can prove that you are knowledgeable in the chosen field)..ect
now this is the great part... even though you can show on paper that you have earned $10,000 before taxes.. you can now start making deductions for fuel, advertising, that may put you in the red.. they dont care about that, just that you made over $10,000 as a working farm
BUT before you can put any deductions or tax break in place.. you must have a agriculture number so be registered with the government as a farm
Ideally they would like this
2008 track all income and deductions.. DONT CLAIM
2009 Apply and obtain farm status, jump through their hoops
in feb 2010 you can claim your farm stats when doing your 2009 taxes
I only need to make $2500 because of the size of my property. No business license but a farm tax number.
Property under 2 1/2 acres or over 10 acres need to make $10,000.
It wasn't at all hard to file for Farm Tax. A fellow comes out to view your stock, you have to keep records etc.. He can turn you down if he thinks that you are a scammer.Example, if you don't have a proper set up or there isn't enough birds to get your correct farm income.
Our farm year runs from October to October. So the first year we didn't make enough for that tax year.
Many people file as mixed farming to make the $2500 needed. Some people rent out their property to farmers to get the tax break. Very popular practice with wealthy people who have lots of land. They sell their standing hay to a hay farmer who in return "buys" it back so they have the amount needed for farm taxes. Legal? yes
But all districts require different citeria and different earned amounts.
If a farmer (here) has over 99 laying hens then they must get a egg quota. Very expensive, virtually impossible to get and the eggs must be graded by a Government facility. Thats a drag.
Most people keep just under that amount and keep breeding birds (and roosters) which are not included in the 99 count.
Certain times of the year those breeding bird eggs go into the egg sales. If you sell too many eggs for the 99 bird count, your in trouble, tax wise and might get a letter from the egg police.
After it is all said and done and on paper it is worth it to me for the property tax savings and personal tax return.