Ranchers caught without winter feed due to excess rainfall during the summer haying season have been thrown a lifeline from the federal government.
Federal Agriculture Minister Gerry Ritz announced last week that livestock producers in northern Manitoba, the Interlake and Westlake regions struggling as a result of excess moisture will be able to tap tax deferrals to help them bounce back after a bad year.
The tax deferral allows eligible producers in designated areas to defer income tax on the sale of breeding livestock for one year to help replenish breeding stock in 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 the case of consecutive years of designation, producers may defer sales income to the first year in which the area is no longer designated.
To defer income, the breeding herd must have been reduced by at least 15 per cent. If this is the case, 30 per cent of income from net sales can then be deferred.
In cases where the herd has been reduced by more than 30 per cent, 90 per cent of income from net sales can be deferred.
GOOD FIRST STEP
Manitoba Cattle Producers Association president Major Jay Fox called the tax break a “good first step,” but said that more help is needed.
“Our focus is going to continue to be on a per-head payment for those producers who have been hit the hardest this year and for the last three years with the flooding,” Fox said on the sidelines of the association’s annual general meeting.
Fox estimated that 3,000 ranchers are in need of assistance this year. The tax deferral is a “standard” break offered by government in times of drought or floods, and is a useful measure for extending relief.
However, he added, that with cattle prices rising in recent
months, ranchers will likely need more money to get back into the game come spring.
“But we caution producers in the selling of animals,” he said. “They are going to sell into a rising market, so the difficulty of getting back into the market with the same amount of cattle is going to be a real killer.”
Eligible producers will be able to request the deferral when filing their 2010 income tax returns. Livestock producers are advised to contact their local Canada Revenue Agency Tax Services Office for details on the income tax provisions.
In the release, Ritz added that the preliminary designation has been established based on soil moisture and summer rainfall, supplemented with estimates of forage yield, and feed availability. Final decisions and any needed adjustments will be made when all the impacts of the excess moisture are known and when forage yield information is available.
Assessment of the excess moisture situation will continue throughout the fall and, as more data about forage yields are known, tax deferral areas could be expanded. [email protected]
“Ourfocusisgoing tocontinuetobeon aper-headpayment forthoseproducers whohavebeenhitthe hardestthisyearand forthelastthreeyears
– MAJOR JAY FOX