Canada Grants Agricultural Tax Concessions

by Mike Godfrey, Tax-News.com, Washington

06 March 2009

Canadian Finance Minister Jim Flaherty has tabled a proposal in the House of Commons for tax amendments to help farmers who have had to deplete their breeding herds of grazing livestock as a result of flood or excessive moisture.

The income tax amendments will extend the existing rules that apply to farmers in prescribed drought regions. They will permit farmers, who dispose of such breeding livestock in a taxation year because of flood or excessive moisture, to exclude a portion of the sale proceeds from their incomes until the following taxation year. As a result, the full amount of the proceeds eligible for the deferral will be available to replenish their herds in the following taxation year.

In particular, this tax deferral will apply to sales of breeding herds of grazing livestock in a taxation year in regions that are prescribed, on the advice of the Minister of Agriculture and Agri-Food, as suffering from flood or other excessive moisture conditions significantly affecting forage yields in the year.

As with the existing rules applicable in respect of prescribed drought regions, the tax deferral will apply to unusually heavy sales, with the proportion of sales proceeds eligible for deferral rising with increasing levels of sales. The deferral will apply to proceeds from sales of grazing livestock where such sales result in a reduction of 15% or more of the number of animals in a farmer’s breeding herd. For sales which result in a reduction in excess of 15% and less than 30% of the breeding herd, 30% of the proceeds will be eligible for the deferral, while 90% of the proceeds will be eligible for the deferral in respect of sales of 30% or more of the animals in the herd.

Flaherty announced the intention of the government to introduce legislation to implement this proposal "at the earliest opportunity."

Recommended