Lion’s Club Hall April 1st, h00 to 21h00 RSVP: Victor Brunette Office Property Tax Reimbursement Program 2014 Victor Brunette, ing.f.

* Woodlot Owner Status * Property Tax Reimbursement Program * Revenues and Expenses * Capital Gains Deductions * Inter-generational transfer * Forest Operations Tax

Canada Revenue Agency * Interprétation bulletin IT 373 R2

Définition: * A woodlot is a parcel of land covered with trees… * Those trees grow with … or without human intervention….

It could be * A commercial woodlot ? * A non-commercial woodlot ? * A farm woodlot ?

A commercial woodlot is in continuous operatioin * existing and recognized business * Ongoing operation of a business

Existing business In the definition of a business, the law means a commerce, a profession, a trade, an operation, an industry or another activity related forests and forestry.

Defining a business:  A business requires time, money and work  The time needed to bring a business within a reasonable expectation of profit varies  A business has a legal status

* Reasonable expectation of profit (REP) Most important

Criteria for determining REP  Importance of business plan  Efforts invested  Time invested  Financial capital invested  History of profits and losses  Forest knowledge and competency

Expected activities * Silviculture operations * Plantations * Wood Harvesting * Thinnings

If it is a commercial woodlot: * All expenses to generate revenue are deductible * Commercial losses are 100% deductible

If one does not « operate » the woodlot, then it is non-commercial * It is a personal asset * No expense whatsoever is deductible

A farm woodlot is a woodlot in operation * Farm woodlot activities are those accepted by Revenue Canada and Revenue Quebec as corresponding to agricultural activities

Why agriculture ? * Fiscal law recognizes agriculture as a definite sector * Agriculture has particular rules and regulations * Capital gains deductions * Family transfer tax free * Accounting method (cash vs calendar year)

Defining agriculture: * The culture of soil * Upkeep of farm animals * Beekeeping * Gardening and horticulture * Silviculture (Bulletin IT 373 R2 par. 14) * Christmas trees, maple syrup…

* Which is not a tax reimbursement program …. Dixit me. * It is rather a reimbursable provincial income tax credit on sylviculture and other accepted woodlot investments ………….to a maximum of 85% of the property and school taxes paid.

Paperwork * Professional forester’s report * Provincial Income Tax Return * Annex E, part C * Follow up on residual claims …… paper track

(FAQ) Frequently Asked Questions Q1: Eligibility……..One tax account ? Yes for one tax account… Yes for many tax accounts ….Yes for both municipal property tax, land transfer tax (welcome tax) and yes for school tax. For each property unit for which you claim the tax program…. You need an active woodlot owner status, a lot registration on the status and an active woodlot management plan ….. For one day of the year

FAQ 2 How and when you claim on your annual tax revenue? I claim the 2013 expenses on my 2013 tax declaration which I file in 2014 and I receive a reimbursable credit in 2014 and I declare this reimbursement as a revenue in I claim the 2014 expenses on my 2014 tax declaration which I file in 2015 and I receive a reimbursable credit in 2015 and I declare this reimbursement as a revenue in 2015.

FAQ 3 and 4 * Q3 Q4: What astérisks mean ***** * Possibility to use the receipt rather than the determined rate……with conditions….. * Example: Rate = 1200$ ou Rate 1200$**** Receipt = 1000…..Claim 1200$ * Receipt = 1600$ ….. Claim 1600$ * Receipt = 3000$..... Calim 2400$

FAQ 5 * Include GST et la PST ? * Use the rate in the annex … the reate is the rate * If you use the receipt… you can use the total amount * ….Except if you are a buseness which already claims the GST and PST…. Registered to tax status… * No double dipping !!!!

FQA 6 * Q6: Claims transferable to new owner ? * No….No but once a claim is file, the residual can be claimed on other properties for as long as your woodlot owner status is active.

FAQ7: Requirements * Status Woodlot Owner * Registration of forest lots with active management plan on status registration * Municipal property and school tax receipts * Accepted forest activities $$ = or > tax $$ ( producer himself or contracted work) * Professional forester’s report * No Double Dipping … PRTF ou PMVFP or farm tax credit program

* FAQ8: May I benefit from PRTF and PMVFP ? * Yes ……Complementarity….but…. * One has to separate technical services cost and operations cost * No Double dipping !!!!

* FAQ8: Complementarity Possibilities PMVFPPRTF RateRate Règlement PRTF TechniqueExécutionTechniqueExécution 1xx 2xx 3xx 4xx

* FAQ8: PRTF or PMVFP road building receipt 1500$ Possibilities PMVFPPRTF Taux AgenceTaux Règlement PRTF technicaloperationaltechnicaloperational * * *

* FAQ8: PRTF or PMVFP roadbuilding receipt 4000$ Possibilities PMVFPPRTF Rate AgenceRate PRTF TechnicalOperationalTechnicalOperaTIONAL

* FAQ8: PRTF or PMVFP culvert receipt 600$ Possibilities PMVFPPRTF RateRate PRTF TechnicalOperationalTechnicalOperational * * *

* FAQ8: PRTF PMVFP culvert receipt 4000$ Possibilités PMVFPPRTF Rate AgenceRate PRTF TechniqueExécutionTechniqueExécution

* FAQ10: Silviculture work on one evaluatiuon unit and claim on another evaluatiuon unit ? * Yes…. As long as it is the one landowner

Q11

* FAQ12/ FAQ13 : Claim calculation PRTF? * Expenses Investment < taxes * Save them and use them cumulatively * 5 years (subsequent to investment) * Expenses Investment > taxes * Admissible for reimbursement * 10 years (subsequent to investment)

FAQ 15: If I do not have income tax to pay ! * The reimbursement of PRTF is a reimbursable tax credit …. whether you owe tax or not!!!!

FAQ 16: Can I do the work myself? * Yes….but… * If you have a woodlot management convention… contract… talk to your accredited forester. Verify with your professional forester.

Victor Brunette, professonal forest ingineer Agence des forêts privées de l’Outaouais Questions?