Alternatively, the price of a specified type and grade of grain on the day payment is made can be used. D. Custom Farming Arrangements Custom farming arrangements provide an alternative to leasing for those landowners who wish to remain classified as a farmer under the Income Tax Act. The arrangement allows a landowner to retain close control of the farm business without becoming actively involved in the operation. The capital gains rollover provision can be preserved. The capital gains exemption on farmland is maintained.
Landowner assumes all risk.
All farm operations are arranged by the landowner. The landowner makes all the farming decisions, arranges for the completion of all field operations and pays for all crop inputs. Joint Farming Venture Agreement - The landowner and custom farm operator are both considered to be farmers. The customer operator pays for all of the crop inputs and equipment. It is important to consult a lawyer, accountant or farm management specialist before entering into any custom farming agreement.