List of designated regions announced for 2020 Livestock Tax Deferral provision

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Source: Canadian Cattlemen’s Association

On May 11, Agriculture and Agri-Food Canada announced the list of designated regions eligible for the 2020 Livestock Tax Deferral provision.

Provinces with eligible regions for the tax deferral include Quebec, New Brunswick, Nova Scotia and Prince Edward Island. The full map and list of designated regions can be found here.

The Livestock Tax Deferral provision allows cattle producers located in designed regions who sell part of their breeding herd due to extreme weather to defer a portion of sale proceeds to the following year. Proceeds from deferred sales are included as income in the next tax year, when they may be at least partially offset by the cost of reacquiring breeding animals. In instances of consecutive years of drought or excess moisture and flood designation, producers may defer sales income to the first year in which the area is no longer designated.

In order to defer income, the breeding herd must have been reduced by at least 15 per cent. If the breeding herd was reduced by at least 15 per cent, but less than 30 per cent, then 30 per cent of income from net sales can be deferred. Where producers reduced their breeding herd by 30 per cent or more, 90 per cent of income from net sales can be deferred.

With the 2020 individual tax year payment deadline of April 31, 2021 already passed, eligible producers may need to take additional steps to utilize the deferral.

–  Producers yet to file their Self-Employed Farming Income 2020 tax return have until June 15, 2021 to take into account the livestock tax deferral provisions.

–  If producers are eligible and choose to utilize the livestock tax deferral but have already filed their tax return, CCA recommends producers consult their tax professional about filing a 2020 tax return adjustment.

While CCA appreciates today’s announcement of eligible regions for the 2020 Livestock Tax Deferral provision, CCA maintains its position that considerable amendments to the provision are needed to make it a more functional risk management tool for cattle producers.

CCA has recommended that the provision could be improved by granting producers the ability to utilize the tool through individual election rather than a geographic determination. This would reduce the risk delayed announcements and excluding access for producers who fall outside the boundary lines but are still dealing with extreme weather challenges. CCA has also advocated that all classes of cattle be made eligible under the deferral provision.

Last fall the House of Commons Standing Committee on Agriculture and Agri-Food report on business risk management programs recommended that the Government of Canada work with farm organizations to conduct a comprehensive review of the Livestock Tax Deferral provision.

CCA will continue to work with the federal government to establish a formal review of the Livestock Tax Deferral provision with the intention of modifying the tool so that it can support more timely and beneficial management decisions for cattle producers facing challenging weather conditions.

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