Canada Expands Cattle Tax Deferral

OTTAWA - Jan 27/04 - SNS -- Canada has expanded the parts of the country where livestock producers are eligible to defer 2003 income tax income from cattle sales to include more areas of Manitoba, Saskatchewan and Alberta.

Agriculture and Agri-Food Minister Bob Speller also highlighted for producers the fact that the Income Tax Act gives the Canada Revenue Agency (CRA) the authority to cancel or waive penalties and interest to those who are unable to meet their tax or duty obligations due to extraordinary circumstances, such as those created by the current situation with bovine spongiform encephalopathy (BSE). These are known as "fairness provisions."

The CRA has the flexibility to use a common sense approach to help those with problems arising through no fault of their own. Individuals and businesses can contact their local tax services offices to ask about submitting a fairness request. Applications are reviewed and decisions made on a case-by-case basis.

The drought-related tax deferral was made after reviewing soil moisture, precipitation levels and forage yield for the 2003 growing season, and provides a management option to owners of breeding livestock who were forced to sell all or part of their herd due to drought conditions affecting feed or water supplies.

"Because the effects of the drought have been extensive across the West, we have designated a further 74 areas to the 168 previously designated for tax deferral on 2003 income from drought-induced sales of breeding livestock," Speller said. "While market conditions present ongoing challenges, some producers continue to sell cattle in response to the unfavorable conditions due to drought."

Eligibility for deferral was determined on the advice of Speller to Ralph Goodale, Minister of Finance.

The deferral allows eligible producers in the designated areas to defer income tax on the sale of breeding livestock for one year to help replenish breeding stock in the following year. In the case of consecutive years of drought designation, producers may defer sales income to the first year in which the area is no longer designated.

Eligible producers will be able to request this deferral when filing their 2003 income tax returns. Livestock producers are advised to contact their local Canada Revenue Agency office for details on the income tax provisions.

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