![]() Many farmers who have significant income in areas other than farming and a small, non-profitable farm on the side try to deduct their farm losses, but that is only possible if you demonstrate there was a realistic expectation of profit, which does not apply to hobby farms. However, this also means losses related to this activity cannot be applied against other sources of income. If you are accurately classified as a hobby farmer, you do not have to report your farm income on your tax return. You could be generating a little bit of revenue from the sale of a few cows or crop that’s growing on a small parcel of property, but if you’re not actively marketing your activities or looking to turn a profit, the CRA would consider these hobby activities. In most cases, these farmers have significant income outside their farm business and they’re simply farming because it brings them pleasure. It could be that the farmer in question lives on an acreage and has excess land available or perhaps they grew up on a farm and are conducting farming activities for nostalgic purposes. Hobby farming is different from part-time farming in that the farming activities involved are primarily recreational and there is no realistic expectation of profit. In addition to these two options, there is a third classification that presents a different set of advantages and limitations: hobby farming. In these cases, reporting the farm as a business could be advantageous because the expenses related to the farm might be higher than the income and these losses can be applied against other sources of income, lowering the taxpayer’s liability. Someone who has a farming business on the side with a regular source of income outside the farm would be considered a part-time farmer. When they compile their tax returns, they report all their farm revenue and have the ability to deduct relevant expenses against any revenue on their tax return. ![]() The pros and cons of being classified as a hobby farmerĪ full-time farmer gets into the business of farming with the reasonable expectation of profit. ![]()
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