Drought Makes Local Cattle Producers Eligible For Tax Deferral Program

Cattle producers in the Moose Jaw region, as well as a majority of the province, who sold at least 15 percent of their breeding stock due to the lack of hay are eligible for the Livestock Tax Deferral Program for a portion of the proceeds.

The deferral is available for the 2019 tax year due to the extremely dry soil moisture conditions which resulted in a lack of forage for their herds.

To defer income, the breeding herd must have been reduced by at least 15%.

• Where the breeding herd has been reduced by at least 15%, but less than 30%, 30% of income from net sales can be deferred.

• Where the breeding herd has been reduced by 30% or more, 90% of income from net sales can be deferred.

By being able to defer the income from being included on their taxes it allows producers to use it in the subsequent year to purchase replacement breeding stock. 

All cattle producers in the Rms in orange are eligible to apply - source Agriculture Canada

The program is aimed at reducing the costs of a tax burden producers would face while dispersing their breeding stock in dry years while requiring replacement animals when the climate event subsides.

The livestock tax deferral provision allows livestock producers in prescribed drought, flood or excess moisture regions to defer a portion of their 2019 sale proceeds of breeding livestock until 2020 to help replenish the herd. The cost of replacing the animals in 2020 will offset the deferred income, thereby reducing the tax burden associated with the original sale.

Prescribed regions are designated, on the advice of the Minister of Agriculture and Agri-Food Canada to the Minister of Finance, when forage yields are less than 50% of the long-term average as a result of drought or flooding in a particular year. 

In order to apply the producer must request the Livestock Tax Deferral Program on their 2019 income tax returns.