Selling your farm is supposed to be tax free, right? At least
the first $800,000. So why is that not always the case, and what
can you do about it?
What is alternative minimum tax?
The alternative minimum tax (AMT) is an alternative way to
calculate taxes owing in Canada when an individual experiences
preferential tax deductions. It was brought into effect to guard
against situations in which high-earning individuals might be in a
position to pay little or no tax by using certain deductions or
"tax preferences" to reduce a large portion of their
income. There is a "minimum tax" the Canada Revenue
Agency wants individuals to pay when using these tax
preferences.
Thus, there is the typical way of calculating taxes, which
considers the special tax deductions and credits such as the
lifetime capital gains exemption, and there is this alternative
method. The typical way will usually result in more tax owing. But
when the second calculation results in higher taxes,
