Cattle Producers Facing Feed Shortages Get Tax Relief

Robert Thomas

Farmers and cattle ranchers in the Moose Jaw region have been included in the initial Livestock Tax Deferral Provision due to the feed shortages brought on by drought.

Under the program cattle producers facing feed problems brought on by drought or flooding are allowed to sell a certain portion of their breeding stock and defer a portion of taxes until next year. If they buy breeding stock to replace what they sold they do not have to pay tax on the exemption portion of the sale.

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

•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.

In a year in which a region has been prescribed, income from livestock sales are deferred to the next tax year when the income may be at least partially offset by the cost of reacquiring breeding animals, thus reducing the potential tax burden. In the case of consecutive years of drought or excess moisture and flood conditions, producers may defer sales income to the first year in which the region is no longer prescribed.

It needs to be noted that the Moose Jaw region had the same provision last year. Both years were due to feed shortages brought on by dry and drought conditions.

In a previous MJ Independent article Chad MacPherson, General Manager with the Saskatchewan Stock Growers Association, said that many cattle producers would be facing tough decisions this Fall due to the tight feed situation. The high cost of feed could likely have many culling or selling of portions of their herds, he said.

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“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. To be designated, the affected area must have recognized geo-political boundaries (for example municipalities or counties) and be large enough to have an impact on the industry. Impacts on individual municipalities/regions would not result in a designation,” a press release from Agriculture and Agri-Foods Canada stated.

The list is a preliminary one and will be finalized in December. The initial list is compiled based upon Spring runoff and Summer rainfall to estimate forage production. The final list is based upon actual forage production and through discussions between Federal and Provincial staff.

To see if your RM is included in the initial list please refer to the map below.