Taxes and Farm Equipment

Farmers and other agricultural producers get a break from paying goods and services tax/harmonized sales tax (GST/HST) on certain pieces of farm equipment because they typically do not collect tax on their sales of the items they produce. The federal government has recognized that this imbalance can cause cash flow problems. The Canada Revenue Agency has created an info sheet that sets out the various rules and provides lists of designated equipment that has been deemed “zero-rated”. For specifics on your decision to purchase or lease farm equipment, you can refer to the CRA website. There are seven categories including tractors but the purpose of the equipment must be for agricultural use to qualify for the zero tax rating. The equipment listed must also meet specific size, capacity or power criteria. Accessories, if sold with the equipment are included in the zero-rated category but if purchased separately are subject to paying the GST/HST. The accessories also must be attached to a unit to create a single piece of equipment. The CRA information sheet also contains lists of other equipment that while used on a farm, are not eligible for the zero rating. Before purchasing a piece of equipment you should make yourself aware of how it will be taxed. If you have questions about the taxation treatment your equipment will receive and the information sheet does not provide you with the necessary information, you can call the CRA to address your specific case. Topline trailers will point you in the right direction to get the answers you need before you purchase agricultural equipment.