Farmers who contribute to the Manitoba Wheat and Barley Growers Association (MWBGA) checkoff can claim a federal tax credit through the Scientific Research and Experimental Development (SR&ED) program. The credit is based on the amount of checkoff funds invested in research and development, which means 14 per cent of the MWBGA checkoff qualifies for the credit.
Farmers can calculate their total checkoff contribution by referring to their wheat and barley sale receipts. Individual farmers can claim to a maximum of 15 per cent while corporations can claim up to 35 per cent. You file a T2038 (IND) for farm proprietorships or a T2SCH31 for farm corporations.
A farmer may not claim investment tax credits (ITCs) on any portion of checkoff that has been refunded by the MWBGA.
The credit earned may be used to offset federal tax owing in the current year; or if you do not owe federal tax in the current year, a portion may be refunded to you as an individual or all may be refunded if you are a corporation (CCPC). Other options include carrying the credit forward up to 10 years to offset federal tax or carried back up to three years. All checkoff investment tax credit applied against taxes payable or refunded must be reported by the producer as income in the subsequent year.