. Agri-news. Agriculture. 4 December 12, 1977 FOR IMMEDIATE RELEASE CAPITAL GAINS A farmer who sells property, whether it is machinery, equipment, land or buildings has to pay tax on half of any profit in excess of the property's original cost or in excess of its value on December 31, 1971, which was Valuation Day. "Such profits must be reported as profit in the year of the sale unless the owner avails himself of certain options, says Gordon Brown, a partner in the Dunwoody firm of chartered accountants in Edmonton. If, for example, a farmer sells a piece of land for a higher price than h
. Agri-news. Agriculture. 4 December 12, 1977 FOR IMMEDIATE RELEASE CAPITAL GAINS A farmer who sells property, whether it is machinery, equipment, land or buildings has to pay tax on half of any profit in excess of the property's original cost or in excess of its value on December 31, 1971, which was Valuation Day. "Such profits must be reported as profit in the year of the sale unless the owner avails himself of certain options, says Gordon Brown, a partner in the Dunwoody firm of chartered accountants in Edmonton. If, for example, a farmer sells a piece of land for a higher price than he paid for it, he can do one of the following things: , He can pay the tax on one half of the capital gain if the gain exceeds any losses he may have incurred from other operations on the farm or if it exceeds the capital losses he is eligible to carry forward from the previous year or losses he suffered during the year of the sale from the disposal of other capital property. , He can elect to buy property of a similar nature with the proceeds that he obtained from the original sale, and, thereby, temporarily postpone his capital gain. If he chooses this option, he must invest the total proceeds from the land in another piece of land before the end of the follow- ing year. He can purchase an income averaging annuity contract before the end of February of the year following his sale. An annuity is treated as a deduction from the capital gain, and a person who purchases one can choose to have it paid back to him over any number of years. The advantage of an annuity is that it tends to average the capital gain over a period of years as opposed to having it all come into income in one year. The latter situation could put the recipient into a higher tax bracket than would be the case if the income were spread over a number of years. Mr. Brown says all capital gains and losses sustained during the taxation year should be offset against each other before an income averaging annuity is
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