Tax deferrals kick in for soaked and parched West

Ranchers under pressure from this year’s drought in B.C. and northwestern Alberta and excess moisture in western Manitoba and eastern Saskatchewan may get income tax deferrals for their trouble.

The federal government on Tuesday released its first list of designated areas for 2014, within which eligible producers who sold breeding livestock may be allowed to defer some or most of the income tax from those sales.

The list of drought-affected areas so far includes 31 census subdivisions in British Columbia and four counties and five municipal districts in Alberta’s Peace region. Areas on the excess moisture list so far include 27 rural municipalities and one First Nation in western Manitoba plus 22 RMs in eastern Saskatchewan. (List attached below.)

Citing the “extreme weather conditions” in those areas this year, Agriculture Minister Gerry Ritz said the tax deferral gives eligible producers “an additional tool to managing their forage shortfalls, allowing them to redirect money towards restocking next year’s breeding herd.”

The deferral allows eligible producers to defer income tax on sales of their breeding livestock for one year. Proceeds from deferred sales are included as income in the next tax year, to be “at least partially offset” by the cost of buying breeding animals.

Eligible producers will be able to request the tax deferral when filing their 2014 income tax returns.

To qualify, a producer’s breeding herd must have been reduced by at least 15 per cent, from which 30 per cent of income from net sales can then be deferred.

Where a herd has been reduced by more than 30 per cent, 90 per cent of income from eligible net sales can be deferred.

Producers in areas that have had consecutive years of drought or excess moisture/flood designation will be able to defer sales income to the first year in which their areas are no longer designated. No areas were designated during 2013.

In a separate release Tuesday, Manitoba Beef Producers president Heinz Reimer noted the cattle producers’ group has been lobbying for the deferral “since it became clear that flooding and excess moisture conditions would lead to forage shortfalls for a number of producers.”

The forage shortfalls, he said, have “forced producers to make some tough decisions that will have a lasting impact down the road.”

Federal agriculture ministers may request that the Canada Revenue Agency allow such tax deferrals when impact is deemed “significant” — meaning forage yields in a given year are less than 50 per cent of the long-term average, across an area large enough to have an impact on the industry.

Preliminary designations can be made, usually in September, “if it appears that the criteria will be met.” Final decisions and adjustments are made on designations when all forage yield information is available, usually in December. — AGCanada.com Network

Livestock tax deferral designated regions, 2014

British Columbia (drought): Census subdivisions Alberni-Clayoquot (A, C, D), Bulkley-Nechako (A through G), Capital (F, H (Part 2)), Cariboo (A, B, C, I), Comox Valley (A), Cowichan Valley (F) Fraser-Fort George (A, C through H), Nanaimo (C, H), Peace River (D, C, E) and Powell River (D).

Alberta (drought): Birch Hills County, Clear Hills County, Grande Prairie County No. 1, Saddle Hills County; municipal districts of Fairview, Greenview, Peace, Smoky River and Spirit River.

Saskatchewan (excessive moisture): Rural municipalities of Antler, Argyle, Calder, Cana, Churchbridge, Cote, Fertile Belt, Grayson, Langenburg, Martin, Maryfield, Moosomin, Orkney, Reciprocity, Rocanville, Saltcoats, Silverwood, Spy Hill, Storthoaks, Wallace, Walpole and Willowdale.

Manitoba (excessive moisture): Rural municipalities of Albert, Alonsa, Arthur, Brenda, Cameron, Dauphin, Edward, Ethelbert, Gilbert Plains, Glenwood, Grandview, Hillsburg, Lakeview, Lawrence, McCreary, Mossey River, Ochre River, Pipestone, Rossburn, Russell, Shell River, Shellmouth-Boulton, Sifton, Silver Creek, Ste. Rose, Whitehead and Winchester; Valley River First Nation 63A.