Jennifer Nash is a plumber in Waterloo, Ontario, who spends all of her weekends and holidays operating a farm she purchased this year. She is confident that within two years her farm will be making a profit. In the current year, the farm had a loss of $18,000.
In the current year, she can deduct a maximum of $2,500 of the farm loss against other income.

Question

Quizplus · Accepted Answer

The $2,500 limit on farm loss deductions against other income applies specifically to hobby farms or farming activities not considered to be for profit in the eyes of the tax authorities. If Jennifer Nash is operating her farm with the intention of making a profit and can demonstrate this intent (e.g., through a business plan, efforts to make the farm profitable, investment in the farm), she may be able to deduct more than $2,500 of her farm loss against other income, depending on the specific tax laws and regulations in her jurisdiction.

Jennifer Nash Is a Plumber in Waterloo, Ontario, Who Spends