Farmers in Manitoba pay no federal capital gains tax up to $750,000, cumulative in a lifetime, on the sale of used farmland. Manitoba has no death taxes, inheritance taxes, or capital transfer tax, when left to a spouse or in trust. For income tax, everyone is allowed to earn up to $9,134 free of Manitoba tax, and $11,474 for federal tax.
The thresholds thereafter for ‘taxable income’ are:
up to $31,000 at 25.8%
$31,001 to $44,701 at 27.75%
$44,702 to $67,000 at 34.75%
$67,000 to $89,401 at 39.4%
$89,402 to $138,586 at 43.4%
above $138,587 is charged at 46.4%.
Corporation tax is levied at 11% of profit up to $400,000, and 32% for anything over $400,000. We do not have any national insurance contributions to pay, but do have to make contributions to the Canada Pension Plan, to the tune of 4.95% of income to a maximum of $2,544 paid by both employer and employee, with a self-employed person paying the equivalent of employer and employee rates, up to a maximum payment of $5,089.
As Canadian farmers can choose to be taxed on the difference between income and expenses, a wise farmer should check the revenue and expense situation in the latter part of his tax year. They are permitted to defer sales of grain or cattle and delay payment on delivered grain or stock to the following year, and purchase cattle or machinery prior to the end of the year, in order to reduce their tax liability for the current fiscal year.
Canada has a Goods & Services Tax (GST) of 5% which is similar to and administered almost identically to Value Added Tax (VAT). In addition, Manitoba has an 8% provincial sales tax, which unfortunately is not refundable.
Farm land and buildings in Manitoba are taxed with the amount payable dependent upon the quality of land and the extent of buildings. Money raised from these taxes is used to pay for road building, police and fire control, snow plowing, and school.