From a news release
The Government of Canada has released the final list of designated regions where livestock tax deferral has been authorized for 2018 due to drought conditions, which now includes regions in Ontario.
The livestock tax deferral provision allows producers in prescribed drought or excess moisture regions to defer a portion of their 2018 sale proceeds of breeding livestock until 2019 to help replenish the herd. The cost of replacing the animals in 2019 will offset the deferred income, thereby reducing the tax burden associated with the original sale.
Eligibility for the tax deferral is limited to those producers located inside the prescribed areas. Producers in those regions can request the tax deferral when filing their 2018 income tax returns.
Prescribe Drought Regions – Ontario
· Arran-Elderslie, Bruce County
· Brockton, Bruce County
· Chatsworth, Grey County
· Georgian Bluffs, Grey County
· Gordon, Barrie Island, Manitoulin District
· Grey Highlands, Grey County
· Kincardine, Bruce County
· Meaford, Grey County
· Northeastern Manitoulin and the Islands, Manitoulin District
· Northern Bruce Peninsula, Bruce County
· Shores, Bruce County
· South Bruce Peninsula, Bruce County
· The Blue Mountains, Grey County
· West Grey, Grey County
Prescribed regions are designated, on the advice of the Minister of Agriculture and Agri-Food Canada to the Minister of Finance, when forage yields are less than 50% of the long-term average as a result of drought or flooding in a particular year.
To the designation, the affected area must have recognized geopolitical boundaries (for example municipalities or counties) and be large enough to have an impact on the industry. Impacts on individual municipalities/regions would not result in a designation.
A preliminary list of Prescribed Drought and Flood Regions is usually completed in the early fall, for those regions where it appears that the criteria will be met. Since forage yield information is not final until later in the year, these designations are made primarily on the basis of spring moisture and summer rainfall and are supplemented with estimates of forage yield. Assessments of areas are reviewed in discussions with federal and provincial staff. A final list of Prescribed Drought and Flood Regions, including previously announced regions, is usually made in December when finalized forage yield information is available.
To defer income, the breeding herd must have been reduced by at least 15%.
· Where the breeding herd has been reduced by at least 15%, but less than 30%, 30% of income from net sales can be deferred
· When the breeding herd has been reduced by 30% or more, 90% of income from net sales can be deferred
In a year, in which a region has been prescribed, income from livestock sales is deferred to the next tax year when the income may be at least partially offset by the cost of reacquiring breeding animals, thus reducing the potential tax burden. In the case of consecutive years of drought or excess moisture and flood conditions, producers may defer sales income to the first year in which the region is no longer prescribed.