With land prices hitting record highs across the Prairies, many farmers are left wondering—how can anyone afford to buy right now?
I had this exact conversation with a long-time client, we'll call Peter, during a recent planning meeting. Peter runs a mixed-crop operation and earns around $100,000 to $200,000 in net farming income each year, along with $40,000 from off-farm work. Like many producers, he’s interested in expanding, but feels priced out of the market.
Peter mentioned his brother, we'll call Conrad—also a client—who seems to keep buying land, even in this market. “How is he doing it?” Peter asked. The answer came down to one key difference: Conrad farms through a corporation. And that makes all the difference when it comes to cash flow and tax savings.
The Tax Advantage of a Farm Corporation
To show Peter the impact, we looked at a simple example:
At $100,000 in net farm income:
- Peter (sole proprietor) – pays about $31,000 in tax and CPP (average rate of 31%).
- Conrad (farm corporation) – pays about $11,000 in corporate tax (average rate of 11%).
That’s a $20,000 tax difference—every single year.
Now let’s bump the income to $200,000:
- Peter – pays roughly $74,000 in tax and CPP (average rate of 37%).
- Conrad – pays about $22,000 in corporate tax (still around 11%).
A $52,000 difference in annual tax cost. That’s serious money—and serious buying power.
Why It Matters When Buying Land
Here’s where the real advantage kicks in: Conrad purchases land through his corporation. Because he pays far less in tax, he retains more cash in the company. That extra cash gives him more flexibility, more leverage, and a better ability to jump on land purchase opportunities.
In a competitive land market, Conrad simply has more fuel in the tank than Peter. And he’s not alone—many buyers competing for land today are corporate farms, which means the playing field is not level.
What Can You Do?
This conversation was a turning point for Peter. He’s now moving ahead with setting up a farm corporation for future purchases. The difference in after-tax cash flow is too significant to ignore.
If you're looking to grow your operation, now might be the time to explore incorporating your farm business. The numbers speak for themselves.
This blog was written by Katelynne Devine.
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