Agriculture and Agri-Food Canada has released an initial list of designated drought areas in Alberta, Saskatchewan, and Manitoba where a Livestock Tax Deferral has been authorized for 2022 due to extreme weather conditions.
The Livestock Tax Deferral provision allows livestock producers who are forced to sell a significant amount of their breeding herd due to drought or flooding to defer a portion of their income from sales until the following tax year. The income may be at least partially offset by the cost of reacquiring breeding animals, thereby reducing the potential tax burden associated with the original sale.
Under the Livestock Tax Deferral, to defer income, the breeding herd must have been reduced by at least 15 per cent.
Eligible regions (see below) have been identified based on weather, climate and production data, in consultation with industry and provinces. The criteria for identifying regions for Livestock Tax Deferral includes forage shortfalls of 50 per cent or more caused by drought or excess moisture.
The Saskatchewan Stock Growers Association posted on social media that the livestock tax deferral announcement is a good first step but that a large portion of central Saskatchewan should also be included based on Agriculture and Agri-Food Canada drought watch map. The group has been asking for more comprehensive drought management tools for cattle producers.
The government says it will continue to monitor conditions across the country to determine whether the addition of other regions throughout the year are required.