21 replies to this topic

[Sparky]

Here is a swamp land scenario for you.

“The provincial government is eliminating controversial property-tax regulations on farmland to encourage development of more small-scale farms, Community and Rural Development Minister Bill Bennett announced” November 27 2009.
By Scott Simpson, with files from Joanne Hatherly, Canwest News Service

http://www.timescolo...0630/story.html

Official news release link
http://www2.news.gov...0047-000680.pdf
When reading the above information, you would think that the small farmer would be pleased, but in fact, the smaller the farmed area the higher the penalty.Up until 2007, if a small farmer met the $2,500 annual gross sales requirement, his/her entire property was classified as farmland. This classification provided municipal tax relief.

In 2007, the Honorable Rick Thorpe introduced in Bill 32, a change of the “farm” definition. 2 Section 1 (1) is amended in the definition of "farm" by striking out "as such by the assessor" and substituting "as a farm under this Act".

When questioned by Gregor Robinson the opposition critic, about why the definition should be changed, Thorpe’s answer was…..
“The definition of "farm" in the Assessment Act will be amended to provide consistency in the act. This will not change government policy or assessment procedures.” Hansard quote May 14 2007

So it must have been a coincidence when the local assessors swooped down on every farm within the municipality of Saanich and measured up the area being farmed and split classified the remainder of the property as residential, even if it was forest, swamps, rock outcrops, or whatever.

This was a drastic change to the way a number of farms have been classified in the past. This was nicknamed “The Project” as Saanich was the only municipality in the province undergoing this change. That sounds fair doesn’t it? So after the Saanich farmers cried “foul” on a number of levels, Minister Thorpe announced that he would commission a “Farm assessment review” panel, and they would travel across the province and gain insight from farmers on a number of topics. Keep in mind that the rest of the province had not yet been stabbed by split classification sword.

One of the interesting facts of this review panel was that Thorpe served as Co-Chair for a short while. That fact might not appear as impartial or transparent.

Now Minister Bill Bennett has announced the retraction of split classifications with the following quotes.

“Supporting family farms at a time when they’re facing the challenges of financial uncertainty, high overhead and a changing climate is essential to preserving one of our most valued industries,” said Bennett. “We’ve listened to what farmers have said, and we’ve responded by reviewing and changing our assessment practices to make it easier for them to continue providing the local products British Columbians rely on.” The change is among the recommendations put forth by the Farm Assessment Review.

"We want to make it easier for people to do small-scale agriculture, not harder," Bennett said.

Here is the point where I take exception. Yes there might have been an elimination of split classification, but if a person farmed lees that 50% of his total property size, what was once a $2,500 gross income level has now changed to $10,000 or a 400% increase.

This is a terrible spin.

How can that “make it easier for people to do small-scale agriculture, not harder” ?

Recommendation 6 - For Farm Status Properties Not in the ALR
Property will not be split classified if at least 50 percent of the parcel is under production or contributes to the production of qualifying primary agriculture products, or at least 25 percent of the parcel is under production and the owner/farmer meets the higher income threshold ($10,000 for 2010; and 4 times the income threshold [$14,000] for 2011 and beyond).

http://www.farmasses...uly_31_2009.pdf

This whole topic of “farm assessment” will require a “Judicial Review” if small farming is to survive in British Columbia.

[Baro]

Seriously, that's ridiculous. That's either someone actually setting out to destroy farms in Saanich for some unknown reason, or so bad at their job, so hopelessly stupid they didn't realise how it would affect the land owners...

[pseudotsuga]

What was the impetus for the changes?
Was Saanich missing the revenue? Were people abusing the system?

[Sparky]

Neither. The municipality does not loose a dime. Taxes are a mathematical calculation of the municipality as a whole. The budget is divided by the total assessed value which equals the "mil rate". The mill rate is then applied as a cost per $1000 of property values to arrive at the tax owing for each property. 90 properties paying half of the average taxes might affect the remaining properties by .5%. not the municipality.

I was confused by the Mayor of Central Saanich's remark that the municipality would suffer.

[Sparky]

I don't know of another farmer that abused the system. One would have to be a fraud to accomplish that. There are too many financial checks and balances.

[Bernard]

The checks on farm status are limited. The threshold to get farm status is very low, the amount of gross sales you need to make has not been rising with inflation. The $2750 you have to sell on a property between 2 and 10 acres is an easy one to achieve.

The uphot of this is that there many examples in BC of the richest people with houses in rural areas have managed to use this as a loophole to dramatically reduce their property tax burden.

The gross value of the eggs I produce at my house in Victoria is about $700, the other produce I grow could be sold for close to $800. This is $1500 worth produce on a small lot in the city. It would take very little to get this to over $2750.

For under 2 acre properties you have to have gross sales of $10 000 - this was done to stop people from getting houses declared farms.

The split farm approach has been a problem for small scale farmers but at the same time has caught a lot more of the rich people that have been using the farm classification to reduce their taxes. There has to be someway to ensure serious farmers do not suffer but at the same time the people with the estate like properties do not use this as a loophole.

Farm status does give you a couple of other breaks - as an example you can buy fuel for your farm vehicles at a reduced tax rate.

[piltdownman]

My parents have a place on Pender Island is its non uncommon for someone to have a couple sheep on a 10 acre lot and have a 'farm'. Meanwhile they run a Bed and Breakfast on the property and pay farm tax. Sounds like this is an attempt to stop this sort of thing.

[Bernard]

My parents have a place on Pender Island is its non uncommon for someone to have a couple sheep on a 10 acre lot and have a 'farm'. Meanwhile they run a Bed and Breakfast on the property and pay farm tax. Sounds like this is an attempt to stop this sort of thing.

Bed and Breakfasts have been an assessment problem for some years - should they be assessed as commercial or residential property? The rules moved back and forth for a number of years.

The farm status problems/loophole are almost all with properties in the 2 acre to 10 acre size. I would like to see a much higher threshold for farm status, ideally with $10 000 as the bottom of the threshold.

I would also exclude horses from having any value in farm sales. There are many 'horse' farms out there that only need to sell a horse to qualify. In my opinion horses are not an agricultural product unless they are slaughtered for meat. No other pets are acceptable as an agricultural product.

Another nice loophole, if you grow hay and offer to sell it but end up using it for your horses, the unsold hay counts towards your income even if you do not sell it.

Let us say you plant an acre in Doug Fir and intend to sell them as Xmas trees, that qualifies as a farm.

Meanwhile if have dairy cows you can only qualify as a farm if you have a quota from the milk marketing board people. If you sell raw milk, you can not qualify to be a farm.

If you take your farm product and make something of it, you only get to count the value of the raw product, not the value added product.

The existing rules really work well for people wanting to 'game' the system.

So if you get your place classified as a farm, two things come into play

1) You get a different mill rate - in this region it is not a benefit to get the farm mill rate - in North Saanich it is 3 times as high and in Saanich it is 20% higher.

2) The value of your property is changed - there is a specific formula to follow which I do not have. The property has to now be valued as if it is a farm and nothing else. The buildings are likely to remain roughly the same value but the land is likely to be dramatically reduced in value. The land could be reduced by 95% in value.

If the house remains class 1 residential, you get a lower mill rate on the building, meanwhile the land is class 9 farm and even with a higher mill rate, the taxes are lower.

Let us assume a 5 acre Saanich property with a house valued at $400 000 on it. The land is worth about $800 000 on the open market.

All residential - about $7000 in property taxes
Farm and residential - about $2500 in property taxes.

Getting farm status will save you $4500 a year, all you have to do is prove you 'sold' $2500 in product. If you have 20 to 24 hens and try to sell the eggs you will make that number with no problem.

The higher mill rate on a farm in North Saanich makes some difference. $5000 res versus $2250 farm. Though the savings are still more than $200 a month.

There are a lot of people in this region that abuse farm status. By doing this they place more property taxes on the other property owners.

[Sparky]

"We want to make it easier for people to do small-scale agriculture, not harder," Bennett said.

There may very well be some people who would take advantage of any situation, but in all fairness there are a number of small farmers who make a serious effort.

What we may see now is a 5 acre property with a two acre farm, clear cutting 1/2 acre or more of trees in order to continue to qualify at $3,500 gross sales only because $10,000 would be unachievable.

I do not take exception to the refinement of conditions for betterment or improvement. I do take exception to Minister Bennet's spin that these new regulations will make small farming easier. They won't.

[victorian fan]

There are a lot of people in this region that abuse farm status.

I know of three.

[Bernard]

On a 5 acre farm of which 2 are farmed for produce, you should be able to gross from $8000 to $40 000. Grapes would get you about $8000, apples should get you $40 000.

The $2500 amount is an utter joke. If you can not gross at least $10k from a five acre property, then you are not serious about even part time farming.

2 acres of grapes will be about 300 - 400 hours of work per year.

2 acres of apples is about 500- 700 hours of work per year.

99 hens will lay about 2000 dozen eggs in a year for a gross income of about $8000 to $10 000. They would take about 350 - 600 hours per year.

Meanwhile, someone with a horse farm can gross $5000 to $8000 per year with a single foal in a year.

I live in Victoria so this issue does not really effect me personally, but I do think it is unfair that some of the richest people use a loophole to avoid paying thousands of dollars a year in taxes.

[Bernard]

I should add, I did at one time operate a farmer's market stall and managed to gross $5000 the first year and close to $9000 the second year. It did not take a lot of hours of work today. 18 Sundays a year and then time in the garden.

Part of what I sold was produce from a friend's place, I sold enough of her stuff to get her farm status.

[LJ]

Getting farm status will save you $4500 a year, all you have to do is prove you 'sold' $2500 in product. If you have 20 to 24 hens and try to sell the eggs you will make that number with no problem.

How do you prove you earned that much. Couldn't you just claim you earned that much and put in no hours of work? Are there inspections done?

I know a couple of cases where people were gaming the system but then started to make some real coin and now they are trying to hide income.

All I know is I always pay more taxes for somebody else's benefit.

[Bernard]

How do you prove you earned that much. Couldn't you just claim you earned that much and put in no hours of work? Are there inspections done?

I know a couple of cases where people were gaming the system but then started to make some real coin and now they are trying to hide income.

All I know is I always pay more taxes for somebody else's benefit.

To prove it you are supposed to have receipts, but that is impossible to do with sales at a farmer's market. They took my friend's word for the fact she had enough in sales.

There are inspections by BC Assessment.

[VicHockeyFan]

http://www.timescolo...-sold-1.2942032

 

Former Alberg farm lots fetch $6M; nine of 16 sold

 

[Bingo]

A good outcome for a beautiful piece of land that was unsuitable for farming.

And the cows that have moved on will agree.

[VicHockeyFan]

A good outcome for a beautiful piece of land that was unsuitable for farming.

And the cows that have moved on will agree.

 

They have probably gone to slaughter already.

[Sparky]

$700,000 for a building lot in Saanich? Wow!

 

The price of rice just went up.

[Bingo]

$700,000 for a building lot in Saanich? Wow!

 

The price of rice just went up.

 

I tried to figure out how big a quarter acre lot would be, but instead of doing the math, I found a guy on youtube that explains it quite simply. 

 

https://www.youtube.com/watch?v=9J-JdnfcQao

[Sparky]

That guy needs medical attention.