OTTAWA, Nov. 6, 2017 /CNW/ - The Government of Canada is committed to supporting Canada's farmers by investing in the growth of, and innovation in, Canada's agri-food sector. Budget 2017 sets the ambitious goal of growing Canada's agri-food exports to $75 billion annually by 2025.The agri-food sector is an important driver of economic growth, accounting for more than six per cent of Canada's gross domestic product, and employing one out of every eight Canadians.
Agriculture and Agri-Food Minister, Lawrence MacAulay, on behalf of Finance Minister, Bill Morneau, today announced tax relief to help farmers by:
- Providing tax relief for farmers who receive compensation under the Health of Animals Act as a consequence of the forced destruction of their livestock because of the bovine tuberculosis outbreak in 2016 and 2017 in Alberta and Saskatchewan.
- Designating the regions for 2017 in which farmers qualify for a livestock tax deferral to help them replenish their herds after flood or drought conditions cease, allowing livestock producers in these prescribed regions to defer a portion of their 2017 sale proceeds of breeding livestock to 2018.
The Government also announced it will maintain the current tax treatment of cash purchase tickets for deliveries of listed grains.
"Canada's agricultural sector brings jobs, high-quality food, and economic growth to Canadians. By introducing tax relief and maintaining current tax treatment, we continue to ensure farmers keep their businesses strong, which is vital to the continued growth and success of the sector, and to growing the middle class and those working hard to join it."
- Lawrence MacAulay, Minister of Agriculture and Agri-Food
- The Government of Canada provides producers experiencing extraordinary costs due to bovine TB with over $39 million in compensation under the Health of Animals Act, as well as $7.1 million in financial assistance (federal and provincial) under the AgriRecovery Framework.
- The Government of Canada helps young farmers access capital and acquire the skills they need to succeed on the farm with measures such as:
- the Canadian Agricultural Loans Act Program, which is a loan guarantee program designed to increase the availability of loans to farmers and agricultural co-operatives,
- the Agricultural Youth Green Jobs Initiative, which has been supported through a $5.2 million investment and which helps fund internships for post-secondary graduates and high school students working in the agriculture industry, and
- the Young Farmer Loan, the Young Entrepreneur Loan and the Transition Loan available through Farm Credit Canada.
- The Government of Canada also works closely with provincial and territorial governments to support this important sector through a comprehensive suite of Business Risk Management programs to help farmers manage the risks associated with severe market volatility and disaster situations.
Backgrounder: Advancing Tax Support for Farmers
Tax Relief for Ranchers Affected by Bovine Tuberculosis
The Government has announced further tax relief for taxpayers who receive compensation under the Health of Animals Act due to the 2016 and 2017 bovine tuberculosis (TB) outbreak in Alberta and Saskatchewan that forced the destruction of livestock.
Current income tax rules provide a tax deferral that allows a taxpayer to defer paying tax on the amount received in a tax year as compensation for the forced destruction of livestock from the current tax year to the following tax year.
The objective of the deferral is to allow farmers who would otherwise realize a large income inclusion in the year they receive compensation to have the option to defer the income inclusion to the following year, when that income inclusion may be partially, or fully, offset by the cost of acquiring new livestock.
The Government recognizes that taxpayers affected by bovine TB may be unable to fully replenish their herds within a year and that replacement purchases are expected to extend over several years.
Accordingly, the Government intends to extend the existing tax deferral to better correspond to the repopulation plans and replacement purchases schedule, as determined in consultation with the industry.
As a result, taxpayers who received amounts as compensation in 2016 or 2017 under the Health of Animals Act as a consequence of the forced destruction of their livestock because of the bovine TB outbreak will effectively have the option of including those amounts in income for tax purposes, as follows:
- 2016 and 2017 tax year: no amount of compensation received will be included in income;
- 2018 tax year: 83 per cent of compensation received will be included in income;
- 2019 tax year: 11 per cent of compensation received will be included in income; and
- 2020 tax year: six per cent of compensation received will be included in income.
Livestock Tax Deferral Provisions – Designated Areas Eligible for 2017
The Government today released its list of designated regions in British Columbia, Alberta, Saskatchewan and Quebec in which the livestock tax deferral has been authorized for 2017 due to drought, flood or excess moisture.
The livestock tax deferral provisions allow livestock producers in prescribed drought, flood or excess moisture regions to defer a portion of their 2017 sale proceeds of breeding livestock until 2018 to help replenish the herd. The cost of replacing the animals in 2018 will offset the deferred income, thereby reducing the tax burden associated with the original sale.
Eligibility for the tax deferral is limited to those producers located inside the designated prescribed areas. Producers can request the tax deferral when filing their 2017 income tax returns.
Current Tax Treatment Maintained for Deferred Cash Purchase Tickets
When a farmer delivers a listed grain (i.e., wheat, oats, barley, rye, flaxseed, rapeseed or canola) to the operator of a licensed elevator, the operator may issue a cash purchase ticket or other prescribed form of payment to the farmer. If the cash purchase ticket in respect of a delivery of a listed grain is payable in the year following the year in which the grain is delivered (a "deferred cash purchase ticket"), the taxpayer includes the amount of the ticket in income in that following year.
Budget 2017 launched a consultation on the ongoing use, and potential elimination, of the income tax deferral available in respect of cash purchase tickets for deliveries of listed grains. The Government has carefully considered all the submissions received during the consultation, and will maintain the current tax treatment of deferred cash purchase tickets such that, if a cash purchase ticket in respect of a delivery of a listed grain is payable in the year following the year in which the grain is delivered, the taxpayer will continue to include the amount of the ticket in income for that following year.
SOURCE Agriculture and Agri-Food Canada, Halifax
For further information: Guy Gallant, Director of Communications, Office of the Honourable Lawrence MacAulay, 613-773-1059; Media Relations, Agriculture and Agri-Food Canada, Ottawa, Ontario, 613-773-7972, 1-866-345-7972