The 2011 tax year is barely half over but the federal government has already seen enough of it to allow a number of Manitoba producers to defer income on sales of livestock due to excess moisture.
The Canada Revenue Agency on Monday said it would grant the deferrals to producers in 17 Manitoba rural municipalities (RMs) and three unorganized rural divisions
“The spring of 2011 was very difficult for our farmers due to the destructive flooding on both Lake Manitoba and Shoal Lake,” Agriculture Minister Gerry Ritz said in a release. “The tax relief offered by the program will allow livestock owners to use savings to restock their herds in the spring.”
Deferrals for the 2011 tax year so far will be allowed for producers in the RMs of Alonsa, Coldwell, Dauphin, Eriksdale, Glenella, Grahamdale, Lakeview, Lawrence, McCreary, Mossey River, Ochre River, Portage la Prairie, St. Laurent, Ste. Rose, Siglunes, Westbourne and Woodlands, along with Division No. 19 (Unorganized) and the east and west parts of Division No. 18 (Unorganized).
For eligible livestock producers in areas designated as suffering from either excess moisture or drought, the deferral option allows them to put off paying tax on income from the sale of breeding livestock for one tax year, so as to help replenish breeding stock in the following year.
To defer income, a producer’s breeding herd must have been reduced by at least 15 per cent. If that’s the case, 30 per cent of income from net sales can then be deferred.
In cases where a herd has been reduced by more than 30 per cent, then 90 per cent of income from net sales can be deferred.
Proceeds from deferred sales are included as income in the next tax year, when they can be at least partially offset by the cost of reacquiring breeding animals.
If an area is consecutively designated for two years or more in a row, producers can defer sales income to the first year in which the area is no longer designated.
Eligible producers will be able to ask for the deferral when filing their 2011 income tax returns.
The federal and provincial governments will “continue working closely to assess the impact of excess moisture to determine what additional assistance is required,” the federal government said in Monday’s release.
By early 2011, over 140 RMs in Saskatchewan and Manitoba had been designated for such deferrals for the 2010 tax year due to excess moisture.