Livestock producers who sold breeding stock due to drought in 2015 could see some relief, as the federal government has added to the list of regions where livestock tax deferrals have been authorized.
“Extreme weather created difficulties for Western Canada’s livestock industry last summer,” Minister of Agriculture and Agri-Food Lawrence MacAulay said last week in Ottawa. “Tax deferrals can help producers reduce their losses and focus on rebuilding their herds for the coming year.”
In order to be eligible for deferral, farmers must have sold at least 15% of their breeding herd. If the breeding herd was reduced by 15-30%, these farmers are eligible to defer 30% of their income from the net sales. If the herd was reduced by 30% or more, farmers can defer 90% of their income from net sales. In the following tax year, these deferred sales are included as income, and, may be offset by reacquiring breeding stock.
If a region has been designated with drought or excess moisture and flood for consecutive years, sales income can be deferred into the first year in which the area is free of designation.
For more information on the tax deferral provisions, check out the Canada Revenue Agency’s Tax Guide on Farming Income.