Should You Incorporate Before the End of the Year?

As unique a lifestyle as farming and ranching is, it is also a business with assets that have seen an increase in value of the past 20 years. Just as with non-ag businesses, there are a number of legal structures available to ranchers, regardless of the exact nature of your farm or ranching operation. One option is the corporation. When you file the necessary paperwork with the Corporate Registry, you create a corporation, which is a separate legal person that owns and operates the business. This form of business ownership is becoming more common, and the 2016 census numbers from Statistics Canada show a 45% increase in the number of incorporated family farms in Canada in the last ten years, as the follow table shows: Source: Statistics Canada. Table 32-10-0158-01   Farms classified by operating arrangement, historical data As the end of the 2018 tax year approaches, many ranchers, along with their accountants and legal advisors, will be taking stock to determine if their current legal structure still fits their needs, or it is time to reorganize. Why Incorporate? If your ranch generates more revenue than you need to cover your personal expenses in any given year, it is probably time to incorporate.  Maybe it is time to allocate the future growth of the farm to the next generation, but you still want to make the major decisions. You may wish to give an equity stake in the ranch to a child-in-law while ensuring that the original homestead and the lands used in the business stay in the family should your child divorce.  A corporation is separate from your personal affairs, and having this additional ‘person’ in the mix opens the door for tax and estate planning strategies that cannot be implemented with a proprietorship or a partnership. Some advantages of having a corporation include:
  • the corporation can have multiple owners (called shareholders), each with different types of rights to control the business and earn a profit;
  • shareholders can make agreements, called unanimous shareholder agreements, about how they will operate the business and who can be a shareholder;
  • With contracts and leases, you can bring the next generation more certainty in your estate and succession plans, as assets are owned by the corporation directly and corporations can exist indefinitely;
  • the assets of your business can be transferred, or “rolled over”, to the new corporation on a tax-neutral basis;
  • income splitting between spouses and children is available in some circumstances; and
  • small business tax rates are lower than most personal tax rates, so there is a tax deferral when you re-invest the profits back into the business.
That is not to say that corporations do not have any drawbacks:
  • a corporation is more complex and expensive to establish and operate than a sole proprietorship;
  • corporations are taxed directly, so a corporate tax return must be filed every year;
  • future financing is more complicated;
  • farmland owned by a corporation is not eligible for the lifetime capital gains exemption; and
  • annual filings are required to keep the corporation ‘alive’.
What does incorporating entail? The decision to incorporate starts with a discussion with your accountant to determine if doing so will result in tax savings. Then, your lawyer will help you complete the incorporation process, from choosing a name and creating bylaws to issuing shares. While you can incorporate at any registries office, it is best to use a lawyer because the corporation must be set up with specific features, and you will save money by doing it correctly from the outset. Your accountant will advise on the timing of the incorporation and any rollovers to transfer assets to the new corporation, and your lawyer will prepare the paperwork for these transactions. You will also need permission from your lender if you have mortgages, equipment loans or lines of credit. If you think you might need the corporation as part of your 2018 tax planning, it has to be incorporated before December 31, so start the conversation with your accountant soon.   This article provides legal information only. You and your ranch are unique and deserve quality legal advice that considers your specific circumstances.   By Douglas S. Martinson, Heather F. Koltusky, Isabelle Cadotte and Genevieve (Genny) Loxley © MHR Law LLP, 2018   This article also appears in the October 2018 edition of Alberta Beef Magazine.
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“It’s My Future” Award

On Friday, September 14th, Olds High School hosted Awards Night where students are rewarded for their academic accomplishments and commitment to the Mountain View County community. Justin Harlton had the honour of attending as the presenter on behalf of MHR Law which donated the “It’s My Future” Award. This award is given to the grade 11 student who best articulates in essay format his or her future goals and demonstrates taking steps to achieve those goals. We were thrilled to receive so many well-written submissions for the prize this year, and we wish all candidates an excellent grade 12 year.
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September 19 Brown Bag Lunch on Cannabis Legalization

Join us on Wednesday, September 19, at the Didsbury Train Station to discuss how cannabis legalization will affect you in the workplace. Whether you are an employer, employee or contractor, this Brown Bag Lunch will highlight how the new Cannabis Act set to come into force on October 17, 2018 and the proposed Impaired Driving Act, will impact you. Register on the Didsbury & District Chamber of Commerce website. There’s still some space available!   When: Wednesday, September 19, 2018 at 11:45 am to 1:00 pm Where: Didsbury Train Station, 1811 – 20 Street, Didsbury, Alberta T0M 0W0 RVSP: Please RVSP to the Didsbury & District Chamber of Commerce Cost: free, Bring Your Own Lunch, refreshments provided
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August 22 Brown Bag Lunch on Cannabis Legalization

Join us today at the Didsbury Train Station to discuss how cannabis legalization will affect you in a residential setting. Whether you are a landlord, tenant, condo owner or Condo Board, this Brown Bag Lunch will highlight how the new Cannabis Act, set to come into force on October 17, 2018, will impact you. Register on the Didsbury & District Chamber of Commerce website. There’s still some space available!   When: August 22, 2018 at 11:45 am to 1:00 pm Where: Didsbury Train Station, 1811 – 20 Street, Didsbury, Alberta T0M 0W0 RVSP: Please RVSP to the Didsbury & District Chamber of Commerce Cost: free, Bring Your Own Lunch, refreshments provided
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Information Sessions on Cannabis Legalization

On October 17, 2018, the Cannabis Act (Bill C-45) will come into force and legalize the use, production, distribution and sale of cannabis for recreational purposes across Canada. Join us to find out what it means for you. MHR Law LLP is proud to collaborate with your local Chambers of Commerce to present a series of information sessions on 3 topics related to cannabis legalization: Cannabis in the Workplace, Living Together in Harmony: Cannabis Legalization Issues for Landlords, Tenants and Condo Boards, and Weed Business 101: Commercial Leasing and Starting a Retail Cannabis Business. Each information session will cover 1 of the 3 topics and be held at a location near you in Mountain View County and Red Deer County. Please scroll down for descriptions on each information session. DIDSBURY When: August 22, 2018 at 11:45 am to 1:00 pm; September 19, 2018 at 11:45 am to 1:00 pm Where: Didsbury Train Station, 1811 – 20 Street, Didsbury, Alberta T0M 0W0 Topics: The August 22 session will cover Living Together in Harmony: Cannabis Legalization Issues for Landlords, Tenants and Condo Boards. The September 19 session will deal with Cannabis in the Workplace. RVSP: Please RVSP to the Didsbury & District Chamber of Commerce Cost: free, Bring Your Own Lunch, refreshments provided   INNISFAIL When: end of August, early September Where: Innisfail Public Library & Learning Centre, 5300 – 55 Street Close, Innisfail, Alberta T4G 1R6 Topics: to be announced RSVP: to be announced Cost: to be announced   OLDS When: mid-September 2018 Where: to be announced Topics: to be announced RSVP: to be announced Cost: to be announced   SUNDRE When: mid-September 2018 Where: to be announced Topics: to be announced RSVP: to be announced Cost: to be announced   Topic Descriptions Living Together in Harmony: Cannabis Legalization Issues for Landlords, Tenants and Condo Boards This information session will cover:
  • The impacts of cannabis consumption and home cultivation within the household on landlords and tenants, Condo Boards, condo unit owners and residents of multi-family housing
  • What should be included in a Rental Agreement or Condo Bylaws to cover possible damages and other risks related to cannabis consumption and home cultivation
  • How to deal with impaired residents
  • Important things to consider if you decide to allow home cultivation
  Cannabis in the Workplace This information session will cover:
  • Reviewing your workplace policies
  • Drug testing – what’s allowed and what isn’t
  • Impairment at work and ensuring safety on the job
  • Accommodating employees’ medical needs
  • Effectively responding to employees who have substance abuse issues
  Weed Business 101: Commercial Leasing and Starting a Retail Cannabis Business This information session will cover:
  • What to include in your Commercial Lease, if you are a landlord
  • What to look for in a Commercial Lease, if you are a tenant
  • Insurance coverage and mortgage restrictions
  • Licencing with Health Canada and/or the Alberta Liquor, Gaming and Cannabis Commission (AGLC)
  • Training for employees
  • Federal, provincial and municipal regulation of retail and online sales, advertising, and zoning
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New Year, New Name! MHR Law LLP

On January 1, 2018 we changed our name to MHR Law LLP.  We are the same local and professional team that is here to help provide the Solutions to your legal needs. We can be found at 4 convenient locations in Olds, Didsbury, Innisfail, & Sundre.  We look forward to hearing from you soon and we wish you all a very prosperous 2018!
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New Hours for our Didsbury location starting July 7th, 2017

Starting Friday, July 7th, our Didsbury location will be closed on Fridays going forward.  Our other locations in Olds and Innisfail are OPEN Fridays and can continue to assist you.   The updated office hours for our Didsbury location is as follows;   Monday - 8:30am to 4:30pm (Closed for Lunch 12:00pm to 1:00pm) Tuesday - 8:30am to 4:30pm (Closed for Lunch 12:00pm to 1:00pm) Wednesday - 8:30am to 4:30pm (Closed for Lunch 12:00pm to 1:00pm) Thursday - 8:30am to 4:30pm (Closed for Lunch 12:00pm to 1:00pm) Friday - Closed!   If you have any questions or concerns please contact us at 403-556-8955 or contact @martinsonharder.com
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Innisfail & District Spring Trade Expo – April 21 to 22

Come visit the Martinson & Harder booth at this year's Innisfail & District Spring Trade Expo!  Aaron Robertson and Dan Jackson will be available to visit and answer any questions about our firm that you may have.  They will also be enjoying this year's new addition to the Trade Expo; A Taste of Innisfail, where local restaurants and food vendors will be showcasing their culinary talents. We look forward to seeing you there!   Date/Time: April 21st (5pm to 9pm) and April 22nd (9am to 5pm)   Location: Twin Arenas - 5804, 42 Street, Innisfail, AB
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