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Canada Extends Livestock Producer Tax Deferral

by Mike Godfrey, Tax-News.com, Washington

04 December 2012


With many parts of Canada continuing to suffer drought conditions, the Canadian government has expanded the list of designated areas in which livestock producers can become eligible for tax deferrals.

Under the tax deferral system, eligible producers can defer income tax on the sale of breeding livestock for one year, with the aim of replenishing breeding stock in the following year. Proceeds from deferred sales are then included as income in the next tax year, when they may be at least partially offset by the cost of replacing breeding animals. In the case of consecutive years of designation, producers may defer sales income to the first year in which the area is no longer designated.

Changes to the designated areas list should help livestock producers in British Columbia, Alberta, Manitoba, Ontario and Quebec cope with the effects of dry growing conditions on forage yields, according to Agriculture Minister Gerry Ritz. "Our government understands the difficulties faced by livestock producers due to unforeseen weather and we are acting. With this tax deferral, producers in another 34 drought-affected municipalities will be able to redirect money towards restocking next year," Ritz explained.

To defer income, the breeding herd must have been reduced by at least 15%. If this is the case, 30% of income from net sales can then be deferred. In cases where the herd has been reduced by more than 30%, 90% of income from net sales can be deferred. Eligible producers will be able to request this deferral when filing their 2012 income tax returns.

TAGS: tax | business | corporation tax | food | Canada | tax breaks

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