The rental income of a bar lease cannot be used as a basis for contributions to the Canada Pension Plan (CPP). Farmers who lease their land and have no other source of income eligible for the CPC cannot contribute to the plan. This may result in a reduction in the level of pension benefits in PPP. Although rental income is not eligible for PPPs, it is considered activity income for contributions to a Registered Retirement Savings Plan (RRSP). The property that any landlord or tenant should take into account in the rental agreement: it can also be used to estimate how the share of the crop can be adjusted if a portion has higher costs, such as new technologies. B or the contribution of the equipment. It is important to ensure that the share of the crop is profitable for both parties. A common method of calculating the share of the crop is called the „contribution method.“ Plant parts leases allow landlords and tenants to share the risks and yields of crop production. It also allows some homeowners to maintain their agricultural status tax-wise. Landlords and tenants should review the harvest participation agreement each year to ensure that the agreement remains appropriate for the current year`s circumstances. A tenant may also wish the lease to be listed against the title when the land changes ownership.
There may be very good reasons to consider registering the lease: for example, payments related to real estate may, in some cases, be considered „personal property“ and are covered by the registration provisions of the Personal Property Security Act; Interest on these payments would be subject to all other interest under a lease agreement as long as the lease is registered first. Ownership Transfer – It is important for the landlord and tenant to discuss their expectations in the event that the owner sells the farm property to a new owner for the duration of the lease. A fair agreement will attempt to limit a balance between the lessor`s desire, his ability to sell the farm and the tenant`s desire to pursue the lease agreement. Other – The lease may contain a clause that would terminate the lease in the event of a natural disaster. For example, if the land was flooded and the tenant could not use the property, it would be unfair to insist that the tenant continue to pay the rent in cash, unless the initial rent took into account the risk of flooding. Other unforeseen circumstances are the installation of a highway, a pipeline, an oil well. on leased land, resulting in additional inconvenience and operating costs for the tenant. In some cases, it may be considered desirable to renegotiate the terms of the tenancy agreement or to compensate the tenant for the additional costs or income that may be earned instead of terminating the lease. As a general rule, tenants need written permission from the landlord before making major improvements. It is also important to outline how the value of the improvements will be determined and when compensation will be paid.
An example of some form of compensation to the tenant for improvement is that the lessor exploits the tenant free of charge for a given period of time that must be agreed between the parties (in writing) at the time of the landowner`s agreement. An annual audit and agreement on necessary repairs and improvements could also be included here. Lease termination – The lease agreement should clearly define how it can be terminated. This may be due to a breach of the terms of the lease agreement or only to the arrival of the termination date of the lease. These points clarify the lease and provide talking points for landlords and tenants when formulating the lease: It is important to discuss your Share Crop agreement with AGRICORP to determine the opportunities that landlords and tenants have to insure their share of the harvest. AGRICORP is available at 1-888-247-4999.