Description of farm family income components

Total income: The sum of net operating income and off‑farm income of each taxfiling member of a family involved in a single farm, either a single unincorporated farm or a single incorporated farm.

Off-farm income: The sum of employment income, investment income, pension income, and total other income.

Employment income: The sum of wages and salaries and net non-farm self-employment income.

Wages and salaries: The sum of gross wages and salaries before deductions (including commission income) as per T4 slips, and other employment income such as tips and gratuities. Total wages and salaries also includes tax-exempt employment income earned on an Indian reserve.

Net non-farm self-employment income: Business income, professional income, commission income and fishing income, on a net basis. The net income is the amount reported after expenses and costs are deducted from the gross income.

Investment income: The sum of net rental income, net limited partnership income, the amount of dividends actually received from taxable Canadian corporations (excluding dividends received from the farming corporations), and interest and other investment income.

Pension income: Old Age Security pension, Canada or Quebec Pension Plan benefits, other pensions and superannuation, and net federal supplements. Since 2007, spouses or common-law partners may jointly elect to split pension income. To avoid double-counting, the amount reported by the pension transferee is not included in the estimates, as the full pension amount has been reported by the pensioner.

Total other income: The sum of government social transfers (excluding pension amounts) and other income.

Government social transfers (excluding pension amounts): Employment Insurance and other benefits, Workers' compensation benefits, social assistance payments, Canada Child Tax Benefit (CCTB), Universal Child Care Benefit (UCCB) and provincial family benefits. Both the CCTB and UCCB ended in June 2016 and were replaced by the Canadian Child Benefit (CCB).

Other income: Registered disability savings plan (RDSP) income, taxable amount of support payments received, items reported on line 130 of the T1 tax return such as scholarships, fellowships and bursaries, lump-sum payments from pensions and deferred profit-sharing plans received when leaving a plan, retiring allowances (severance pay), death benefits (other than CPP or QPP death benefits), withdrawals from AgriInvest account (Fund 2) by unincorporated operators, and other income (such as registered education savings plan income and training allowances). Registered retirement savings plan (RRSP) income of people aged 65 or older is also included.

Net operating income: The profit or loss of the farm operation measured by total operating revenues minus total operating expenses, excluding capital cost allowance or amortization of tangible assets, the value of inventory adjustments and other adjustments for tax purposes. The net operating income of the farm is multiplied by the family's share in the corporation or the partnership. The net operating income is also equal to the sum of net program payments and net market income.

Net program payment: Program payments and insurance proceeds after deducting stabilization levies or fees (government levies).

Net market income: Total operating revenues minus total operating expenses minus net program payments.

Total income adjusted for capital cost allowance (CCA) or amortization of tangible assets: The sum of net operating income adjusted for capital cost allowance or amortization of tangible assets and off-farm income of each taxfiling member of a family involved in a single farm, either a single unincorporated farm or a single incorporated farm.

Adjustment for capital cost allowance (CCA) or amortization of tangible assets: The amount of the adjustment for capital cost allowance or amortization of tangible assets.

Capital cost allowance (CCA): A tax term for depreciation used to define the portion of the cost of the depreciable property, such as equipment and buildings, that is tax-deductible. After the calculation of the capital cost allowance, farmers may deduct any amount up to the maximum allowable.

Amortization of tangible assets: Includes amortization of leasehold improvements and amounts referred to as depreciation. Depreciation is a term used to define the loss in value of an asset over its estimated life due to wear and tear and obsolescence.

Net operating income adjusted for capital cost allowance (CCA) or amortization of tangible assets: The net operating income minus the adjustment for capital cost allowance or amortization of tangible assets. The net operating income of the farm adjusted for CCA or amortization of tangible assets is multiplied by the family's share in the corporation or the partnership.

Net market income adjusted for capital cost allowance (CCA) or amortization of tangible assets: Total operating revenues minus total operating expenses including capital cost allowance or amortization of tangible assets minus net program payments.

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