If the supply of the crop is not valued at zero, the supply of arable land is not valued at zero under a sharing regime. It is not important that the delivery of arable land be made by lease, license or similar agreement for a person who is a GST/HST registrant. For example, the supply of lawn seeds and flower seeds is taxable at 5% for GST or 13% for HST, as these seeds are not used for the production of food for human consumption or for animal or poultry feed. For more information on the tax status of the supply of different crops, see GST/HST 4.4, Agriculture and Fisheries. Dispute Resolution – An arbitration or conciliation clause in the written agreement describes how to deal with disagreements that tenants and landlords cannot resolve. The most common practice is to appoint a mutually agreed third party, acting as a mediator or arbitrator. If the recipient of the delivery is not registered for GST/HST purposes and does not need to be registered, the delivery of arable land under a division agreement under a lease, licensing or similar agreement is not valued at zero. For more information on GST/HST registration, see Chapter 2 of the GST/HST Memoranda Series (www.cra-arc.gc.ca/menu/GTMS_2-e.html). Hiring custom operators for cutting jobs can solve this problem. In addition, a proportion of crops whose owners share input costs can also meet the rating agency`s requirements. Discuss such agreements with your accountant. A lease of plant shares may be okay for a farmer by sharing the fruits of her labour in exchange for increased protection against economic and weather factors beyond her control.
Compared to cash leases, the farmer needs less working capital under a harvest share lease, as the lessor participates in these costs. A farmer who uses a lease with a crop share must maintain a shared expenditure count and be able to articulate realistic production targets for the owner. While a stock-cutting agreement requires that part of the production of the property belongs to the landowner, the landowner may receive his share of the actual harvest or cash on the basis of the fair value of the crop or the proceeds of the sale of the crop. A farmer/landowner could be paid in the actual harvest, with the farmer/landowner recovering his or her share of the crop in the fields or the tenant who provides the crop to the farmer/landowner. Another scheme could be invoked by the tenant who puts the farmer/landowner`s share on the market in the crop, in which case the farmer/landowner would agree to receive his share in the form of sales revenue. In addition, an agreement could require the tenant to use the farmer/landowner`s share of the crop, in which case the farmer/landowner would agree to receive his or her share of cash on the basis of fair harvest value at harvest time. In each of these cases, and if the other conditions are met, the supply of agricultural land is estimated at zero to the extent that the consideration for supply is equal to a share in the production of zero crops.