Is Farm Equipment Tax Deductible? What You Should Know Before Purchasing Equipment

The right farming equipment can increase your productivity while also making your life easier; however, the purchase of farming equipment is often a major investment that takes careful consideration and planning before buying. Like most purchases, taxes need to be considered during the purchasing process. It is important to note, that in some cases, the purchase of farming equipment is not taxable.

At Avonlea Farm Sales Ltd., we are often asked, how is the sale of farm equipment taxed? Though many types of farm equipment may be exempt from taxation, the answer is not as simple as yes or no. Knowing whether equipment such as farm tractors and attachments, grain carts,  or seed tenders are exempt from taxation may require the knowledge of a tax expert. However, information on zero-rated farm equipment can be found through the Government of Canada CRA resources. In this post, we offer the basics of what you should know about the taxing of farm equipment and help you answer the question, is farm equipment tax exempt?

What Is Zero-Rated Farm Equipment?

When looking to purchase new or used farming equipment, you’ll likely want to know, is there GST on farm equipment sales? In Canada, some farming equipment is considered to be zero-rated and, as such, is exempt from sales tax. However,  there are many factors that need to be considered when determining if farming equipment is zero-rated or not. Experienced farm equipment suppliers will likely know what products are considered zero-rated. However, speaking with a tax professional who understands the needs of farmers is your best bet when looking for a definitive answer.

Can I Claim the Purchase of Farming Equipment on Taxes?

If you have purchased or are planning to purchase farming equipment, you’ll likely want to know how to write off farm equipment on taxes in order to obtain the best outcome at tax time. Though capital cost allowance is tax deductible, knowing what and how much you can claim is best left to tax professionals. If you’ve wondered if farm equipment is tax deductible, your best option is to consult with an experienced accountant who can help you be prepared for tax time.

When considering capital cost allowance, you may want to learn more about how to calculate farm equipment depreciation such as knowing if farm equipment can be claimed on taxes. Your best bet is to consult with an accountant for questions surrounding GST. They will know how to depreciate farm equipment and claim it on taxes.

Will I Pay Taxes When Selling Farm Equipment?

If you are selling used farm equipment before purchasing new equipment you may wonder, is there GST on used farm equipment? Like every important tax-related question, you should turn to a tax professional for support. However, in most cases a seller would not collect tax on zero-rated farm equipment as described by the CRA. Taxable purchases would still be subject to GST/HST based on where the equipment is being sold.
Purchasing farm equipment that is vital to the productivity of your farm is likely exempt from sales taxes. However, many variables need to be considered. Always seek support from a professional rather than assuming you will not be required to pay sales tax or that something is tax deductible.