The province on Tuesday announced plans for what it calls the Alberta Agri-Processing Investment Tax Credit — a 12 per cent, “non-refundable” tax credit for corporations making capital investments in “value-added agri-processing” in Alberta.

The tax credit would be applied against eligible capital expenditures for corporations investing $10 million or more to build, or expand, agri-processing facilities in the province.

Capital investments made as of Tuesday or later may be considered in the calculation of a company’s total tax credit, the province said, adding it will be ready to start accepting applications this spring.

Eligible qualifying applicants may include corporations that have received funding from other provincial sources, the province said.

“We have heard from Alberta’s producers and processors that we need to do more to help grow our province’s agri-processing industry,” provincial Ag Minister Nate Horner said during an announcement at Harmony Beef at Balzac, just north of Calgary.

The province, he said, “has the fundamentals to take our value-added agriculture industry to new heights and meet the increasing global demand for food.”

With the tax credit, “Alberta has positioned itself to attract more large-scale sector investments than ever before from companies like mine,” Harmony CEO Rich Vesta said in the province’s release. “This is the right way for Alberta’s agri-food sector to support diversification, create jobs, compete and win.” — Glacier FarmMedia Network

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A $1-per-gallon subsidy that had been propping up the industry since 2005 lapsed at the beginning of 2018 due to Congressional inaction, and his hopes for a swift renewal had been declining along with his business ever since (all figures US$).

“I didn’t (lay off my workers) because they failed,” said Whittington, co-owner of Integrity Biofuels at Morristown, about 30 km east of Indianapolis. “To me, the support systems of the industry have failed.”

Integrity Biofuels’ shutdown marks the tenth biodiesel facility to have idled this year after the lapse in the biodiesel credit, putting about 250 people out of work, according to the National Biodiesel Board (NBB). Nationwide production has decreased about 10% year-on-year, according to Energy Information Administration data.

The biodiesel credit was part of a broad legislative effort more than a decade ago to help farmers and reduce petroleum imports by supporting biofuels. At a cost of nearly $2 billion per year, it is among the most expensive U.S. energy subsidy programs.

Its lapse has added pressure on Midwest farmers, a key constituency in the 2020 presidential election already struggling under poor planting conditions and the fallout from the U.S.-China trade war.

In August, some 90 U.S. facilities produced 156 million gallons of the fuel — made from agricultural oils, recycled cooking oil and animal fats — from 172 million gallons a year earlier, according to the U.S. Energy Information Administration. Other plants that have cut production include facilities run by players such as Flint Hills Resources, World Energy and REG.

In recent weeks, industry associations, biodiesel producers and lawmakers seeking to prevent further shutdowns and layoffs have packed pressure on Congressional leadership to renew the so-called Biodiesel Blenders Tax Credit for buyers of the fuel.

On Thursday about 140 companies and organizations sent a letter to House and Senate leadership, urging them to extend the credit before the end of the year.

“Producers are now cutting back production, purchases of raw materials, and deliveries of renewable fuel to consumers, which will have impacts across the economy,” the letter said.

The industry’s advocates want the biodiesel credit to be included in a government funding package to be passed before the end of the year. Whether the credit is included is up to House and Senate lawmakers negotiating it, a House Democratic aide said. In the past Congress has retroactively renewed it with sweeping bipartisan support.

But this lapse has been longer than ever. The government shutdown late last year diverted Congress’ attention from addressing the issue, said Paul Winters, a spokesman for the NBB industry group. Biodiesel groups argue this has thrown confusion into future supply contracts and tightened credit lines.

“A lot of companies have been hanging on by their fingernails,” Winters said.

Republican Senator Chuck Grassley of Iowa, a biodiesel advocate who serves as chairman of the Senate Finance Committee, said the renewal has been complicated by a general decrease in bipartisanship in legislative negotiations.

Industry players worry Congressional impeachment proceedings against President Donald Trump will further reduce the chances of a renewal.

“A lot of us are fearful,” said Michael McAdams, president of the Advanced Biofuels Association.

— Stephanie Kelly reports on the U.S. oil and fuel sectors for Reuters from New York.

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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.

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The tax credit benefits companies that blend biodiesel into fuel sold at U.S. gas stations. It first went into effect as part the American Jobs Creation Act from 2005 to 2009 and has often been renewed retroactively in the years since.

The National Biodiesel Board previously sought to change the credit to benefit biodiesel producers it represents, saying the credit was intended to support the domestic industry. By contrast, some blenders who benefited from the credit were also importing millions of gallons of foreign biodiesel.

But import duties imposed by the U.S. Commerce Department have nearly stopped biodiesel imports from Indonesia and Argentina that were being sold below fair-market value, Kurt Kovarik, the board’s vice-president of federal affairs, told Congressional staff members this week in an email that was obtained by Reuters.

“The change recognizes the success of the trade case in preventing imports of illegally dumped and subsidized biodiesel,” he said.

The board also wants Congress to extend the blender’s tax credit over a long period of time, Kovarik said.

The National Biodiesel Board had pushed this year for the credit to be installed retroactively to 2017 and extended through 2018, but U.S. lawmakers as part of a budget deal in February only approved the credit for 2017.

Scott Irwin, agriculture economist at the University of Illinois, said the group is recognizing it will probably fail to convince Congress to adjust the credit to apply to biodiesel producers instead of blenders.

“The political environment for getting the tax credit extended is getting more difficult,” he said. “They are putting all their eggs on the extension of the credit rather than a conversion.”

— Reporting for Reuters by Tom Polansek and Michael Hirtzer in Chicago; additional reporting by Jarrett Renshaw in New York.

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UPA members had recently pledged to revoke previously-permitted access to their land for snowmobile trails starting Monday (Feb. 6) in a dispute dating back to last March’s provincial budget.

Laurent Lessard, the province’s new agriculture minister as of Jan. 26, announced Friday he had stopped the planned rollout of reforms to the farm property tax credit program (PCTFA) and would revert it to the program model that was in place up until Dec. 31.

In a statement, Lessard said he was choosing the “economic development of the regions” over the PCTFA reform plan.

The province had announced last March that management of the PCTFA would shift to Revenu Quebec (RQ) starting Jan. 1 this year, with an eye toward simplifying the program and easing eligibility requirements to allow an additional 2,500 farmers to receive PCTFA benefits.

The UPA, however, has argued the changes to the PCTFA formula would lead to an average hike of 38 per cent in farmers’ property tax bills.

Lessard said the province was investing more money in the new PCTFA than under the existing program, but the “variations between certain producers were judged to be unacceptable.”

Discussions last week with UPA representatives showed the two sides were in an “irreconcilable situation,” he said Friday.

Despite calling a halt to the PCTFA reform plan, Lessard said he still wants to work on ways to help smaller-scale producers by creating a new tax credit program in the near future.

UPA president Marcel Groleau, in a separate statement, said the province had made a “good decision” in cancelling the PCTFA reform plan and it was no longer necessary for farmers to revoke access to their land for off-road trails.

However, he said, the province has not yet announced any plans to work with farmers, municipalities and the relevant provincial ministries on a sustainable farm property taxation model.

The UPA has estimated farmland values have seen a “substantial” rise of 800 per cent over the past 20 years, and the assessment model used by municipalities has added to the tax pressure on farmers, Groleau said.

Parti Quebecois ag critic Andre Villeneuve, in a separate statement, agreed the province mustn’t sweep the issue of farmland taxation under the carpet.

Villeneuve said he had warned the Liberal government last April that the planned changes to the PCTFA could leave individual farmers paying thousands more out of pocket. “Why wait until there are real negative impacts on the tourism season to act?”

Denise Grenier, presidente of Quebec’s federation of snowmobile clubs (FCMQ), said in a separate statement Friday her organization was “very satisfied” that the dispute was resolved. — AGCanada.com Network

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Finance Minister Greg Dewar’s plan calls for an expansion of the province’s small business venture capital tax credit, broadening its list of eligible businesses to include “non-traditional farming” ventures, as well as brew pubs.

The budget also doubles the maximum number of employees for businesses eligible for the tax credit, to 100 people, bringing it in line with Industry Canada’s definition of “small business,” the province said.

Dewar’s budget also expands the province’s green energy equipment tax credit, which previously offered tax credits of up to 15 and 10 per cent on businesses’ purchases of geothermal and solar thermal heating equipment, respectively.

The expansion calls for a credit of up to 15 per cent on purchases of biomass fuel energy equipment, if installed in Manitoba and used in a business.

The budget also sets up a three-year extension of the province’s nutrient management tax credit, a 10 per cent refundable tax credit for farmers and corporations buying prescribed nutrient management equipment “designed to meet Manitoba water quality standards.”

The nutrient management credit, set to expire at the end of this year, will now run until the end of 2018.

The budget also increases the income limit for businesses eligible for Manitoba’s small business deduction to $450,000, up $25,000, starting Jan. 1, 2016. Canadian-controlled private corporations that qualify for the province’s small business deduction pay a zero per cent rate of Manitoba corporation income tax.

The budget also doubles the period during which unused provincial scientific research and development (SR+ED) tax credits can be carried forward after they are earned, to 20 years.

On matters of food security, the budget also calls for development of a new retail food subsidy to offset the costs of “healthy foods” in 10 of Manitoba’s most remote communities.

The subsidy, the province said, “will complement Manitoba’s promotion of local food social enterprise development in northern communities.”

In all, the budget calls for a $422 million deficit for 2015-16, with revenue projected to increase $179 million or 1.2 per cent from the 2014-15 forecast, and expenditures up $289 million (1.9 per cent) from the 2014-15 forecast. — AGCanada.com Network

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Some crop commodity groups’ checkoffs qualify for the federal Scientific Research and Experimental Development (SR+ED) tax credit, which can be claimed on 80 per cent of eligible research-related expenditures.

Thus, investments in eligible research in 2014 through the western wheat and barley checkoff, administered through the Western Grains Research Foundation, will allow growers to claim 74 per cent of both their wheat and barley checkoff dollars, up from 68 per cent on wheat and 71 per cent on barley in 2013.

The SR+ED tax credit can be used to offset federal taxes owing in the current year; received as a tax refund; carried forward up to 10 years to offset federal taxes owing; or carried back three years to reduce federal taxes paid in those years.

The tax credit is worth 20 per cent of the claimed amount for individual farmers and 35 per cent for farm corporations. Using the WGRF example, an individual grower who paid $100 in wheat checkoff would claim $68 and receive a tax credit of $13.60.

Table: Crop groups’ SR+ED tax credits for 2014 (per cent)

* — Also eligible for claim of 15.8 per cent of levy toward Saskatchewan Research and Development Tax Credit for farm corporations.

** — Also eligible for claim of 15 per cent of levy toward Saskatchewan Research and Development Tax Credit for farm corporations.

Commodity groups whose SR+ED tax credit percentages haven’t yet been announced for 2014, or whose checkoffs aren’t yet deemed eligible, include the Saskatchewan Wheat Development Commission, Saskatchewan Mustard Development Commission, Canaryseed Development Commission of Saskatchewan, Manitoba Pulse and Soybean Growers, Manitoba Wheat and Barley Growers Association and Manitoba Corn Growers Association.

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Prairie growers — other than Alberta barley growers, who pay into a different checkoff fund — will see their WGRF checkoff money eligible for federal Scientific Research and Experimental Development (SR+ED) tax credits at rates of 84 per cent for wheat and 83 per cent for barley.

That’s up from 74 per cent for wheat and 69 per cent for barley on WGRF checkoff contributions made during 2010.

The WGRF calculates the available tax credit based on the portion of the total checkoff money going directly to support eligible research. Farmers who don’t opt out of the WGRF checkoff pay in at rates of 50 cents per tonne for barley and 30 cents per tonne for wheat.

The SR+ED tax credit is earned at a rate of 20 per cent for individuals and 35 per cent for Canadian-controlled private corporations.

So for example, if an individual Prairie farmer put $300 into the WGRF’s wheat checkoff in 2011 and did not opt out, he or she would get a federal tax credit of $50.40 ($300 x 0.84 x 0.20), the WGRF explained in a recent release.

If filing his or her 2011 taxes as a corporation, the same farmer would get a tax credit of $88.20 for his or her WGRF wheat checkoff.

WGRF checkoffs — for 2011, at least — are deducted from the Canadian Wheat Board’s final payments to eligible Prairie producers.

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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.

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The tax credit percentages in 2010 are 74 per cent for wheat and 69 per cent for barley.

The tax credit is earned at a rate of 20 per cent for individuals and 35 per cent for corporate producers that are Canadian-controlled private corporations (CCPC).

Producers who choose to opt out of the program are not eligible for the tax credit.

The percentages above are calculated by looking at the amount of the checkoff dollars spent directly on research; this is then determined to be the eligible portion. Each checkoff organization may vary, as they will have their own eligible percentage.

Wheat example: If a producer contributed $300 in 2010, the el igible amount would be calculated by taking 74 per cent (the wheat percentage) of the $300 = $222.

If the producer files taxes as an individual they would take the $222 and would earn 20 per cent of this amount as a tax credit = $44.40.

For producers who file as a corporation, they would earn 35 per cent of the $222 as a tax credit = $77.70

Producers can visit the WGRF website at www.west erngrains.com for more information.

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