by Mike Godfrey, Tax-News.com, Washington
07 November 2017
The Canadian Government has said that it will provide tax relief to farmers who receive compensation as a result of a recent bovine tuberculosis outbreak.
The Government will permit affected farmers in designated regions to defer paying tax on the amount of compensation received in a tax year.
The objective of the deferral is to allow farmers who would otherwise realize a large income inclusion in the year they receive compensation to have the option to defer the income inclusion to the following year, when that income inclusion may be partially, or fully, offset by the cost of acquiring new livestock.
The relief will be available to farmers who receive compensation under the Health of Animals Act as a result of the forced destruction of their livestock during the 2016-17 bovine TB outbreak in Alberta, British Columbia, Saskatchewan, and Quebec.
The Government said that it recognizes that farmers may be unable to fully replenish their herds within a year, and that replacement purchases are expected to extend over several years.
Affected farmers will have the option of including the compensation received as income for tax purposes, as follows:
- 2016 and 2017 tax years: no amount of compensation received will be included in income;
- 2018 tax year: 83 percent of compensation received will be included in income;
- 2019 tax year: 11 percent of compensation received will be included in income; and
- 2020 tax year: six percent of compensation received will be included in income.
The Government also announced that it will maintain the current tax treatment of cash purchase tickets for deliveries of listed grains.
Agriculture Minister Lawrence MacAulay said: “Canada’s agricultural sector brings jobs, high-quality food, and economic growth to Canadians. By introducing tax relief and maintaining current tax treatment, we continue to ensure farmers keep their businesses strong, which is vital to the continued growth and success of the sector, and to growing the middle class and those working hard to join it.”
Published at Mon, 06 Nov 2017 19:00:00 -0500