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Tax deferrals expanded to flooded ranches

The income tax deferrals offered to Canadian livestock producers on drought-induced breeding stock sales have now been extended to flood-induced sales.

Federal Agriculture Minister Gerry Ritz announced the expanded deferrals Thursday in Winnipeg, starting with the tax owed by producers in Manitoba’s Interlake and Westlake, the regions west of both Lake Manitoba and Lake Winnipeg, who saw substantial overland flooding and excess moisture in 2008.

Hay, forage and pasture fields in those regions were drowned out in 2008, making it difficult for producers to either obtain feed or re-establish feed crops.

“Many Manitoba livestock producers are still working hard to get back on their feet after the flooding in 2008 and this government is standing with them as they rebuild,” said Ritz, who along with provincial Agriculture Minister Rosann Wowchuk also announced forage restoration and feed assistance funding for the affected regions.

“This announcement will make sure producers can buy feed for their livestock, re-seed their forage crops, and we are giving them the breathing room on their tax bills to help rebuild their herds,” Ritz said.

“When floods strike, producers often have to sell off some of their breeding stock,” federal Finance Minister Jim Flaherty said in Ritz’s release Thursday. “By deferring the taxes on those sales, we are making sure producers have the resources they need to buy breeding stock after the flooding is over.”

New programs

“This program builds on the previous support offered through the Manitoba Forage Assistance Program by providing financial assistance to producers to help offset some of the costs associated with replacing lost feed and re-establishing a forage hay crop on land damaged by excess rain last summer,” Wowchuk said.

The federal and provincial governments will partner on a 60-40 basis to fund and deliver a new Manitoba Forage Restoration Program, offering payments of up to $40 per acre to re-establish forage crops, forage seed fields and pasture that were flooded last fall.

The two levels of government will also partner to fund a Manitoba Livestock Feed Assistance Program, providing payments of $70 per head for breeding stock to help cover the cost of feed. Other breeding stock are also eligible and per-head payments will vary based on the type of animal, the governments said Thursday.

“Encouraging result”

The announcement from Ritz and Wowchuk “demonstrates the co-operation between the (Manitoba Cattle Producers Association, Canadian Cattlemen’s Association) and both levels of government dealing with such important issues in activating disaster programs,” MCPA president Joe Bouchard said in the government’s release.

“This will provide a template for future disasters experienced by the agriculture industry under the AgriRecovery pillar of Growing Forward,” he said.

The expanded tax deferrals and flood aid were also a lobby effort for Manitoba’s general farm group, Keystone Agricultural Producers. “We’re very pleased to have obtained this outcome for KAP’s cattle producer members who were hit hard by the flooding in the Interlake and other areas of the province,” KAP president Ian Wishart said in a release Thursday.

“Back in September we put the idea to change the deferral on the table, and we lobbied the federal and provincial governments for months. It’s encouraging to see this result.”

However, KAP added that there’s still a need to include damage to annual crop fields as well as forage crops in such programs, and the group said it would continue to work on that issue.

Levels of deferral

More information about deferring income tax from flood-induced livestock sales is expected to be available soon on the Canada Revenue Agency’s website.

In cases of drought, eligible producers in federally-designated areas can request the deferral when filing their income tax returns. To be eligible for the drought deferral, a producer has to have reduced a breeding herd by at least 15 per cent, for a deferral on 30 per cent of income from net sales.

But if a producer has had to sell to downsize a breeding herd by 30 per cent or more due to drought, then the tax on 90 per cent of income from net sales can be deferred — that is, until the first non-designated year, in either case.

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