Producers are entitled to obtain taxable benefits on canola checkoff deductions that are used to support research and development.
Individual producers are entitled to claim investment tax credits at 20 per cent and the corporate producer rate for Canadian Controlled Private Corporations (CCPC) is 35 per cent.
Only part of the research and development conducted by the Manitoba Canola Growers Association qualifies for the tax credits. This is because research that is not done by an approved research facility does not qualify.
Universities and the government agricultural research facilities are considered approved facilities. For 2011, the rate is 15.93 per cent of MCGA’s research funding will qualify for the tax credit.
The 2010 rate was 11.65 per cent, the 2009 rate was 10.74 per cent, 2008 rate was 11.27 per cent, the 2007 rate was 23.087 per cent, 2006 rate was 24.67 per cent and the 2005 rate was 18.72 per cent. The 2004 rate was 23 per cent, the 2003 rate was 36 per cent, the 2002 rate was 22 per cent and the 2001 was 27 per cent.
The following is an example of what a producer could claim: In 2011, a producer has contributed $200 to the canola checkoff program. That means that $31.86 of these checkoff dollars was invested into eligible R & D ($200 at 15.93 per cent).
- Individual producers would be entitled to claim $6.37 as their investment tax credit amount ($31.86 at 20 per cent).
- Corporate producers would be entitled to claim $11.15 as their investment tax credit amount ($31.86 at 35 per cent).
The investment tax credits earned may be used as follows:
- Offset federal taxes owing in the current year;
- If no taxes are owing, a portion may be refunded to you in the year if you are an individual or all of the credit may be refunded if you are a corporation;
- Carried forward up to 10 years to offset federal taxes;
- Carried back up to three years to reduce federal tax paid in those years.
MCGA is a member organization committed to maximizing net income from canola.