The Livestock Tax Deferral provision has come out months ahead of its usual time to aid producers in the hard agricultural conditions seen due to recent drought conditions.
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 per cent of the long-term average as a result of drought or flooding in a particular year.
In the east central region these counties have been added to this provision including: Camrose County, Flagstaff County, Kneehill County, Lacombe County, County of Paintearth, MD of Provost, Red Deer County, Special Areas No. 2, 3, 4, Starland County, County of Stettler, MD of Wainwright and Wheatland County.
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 be designated, the affected area must have recognized geo-political boundaries and be large enough to have an impact on the industry.
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 is supplemented with estimates of forage yield.
To defer income, the breeding herd must have been reduced by at least 15 per cent.
Where the breeding herd has been reduced by this amount, but is less than 30 per cent, 30 per cent of income from net sales can be deferred.
Where the breeding herd has been reduced by 30 per cent or more, 90 per cent of income from net sales can be deferred.
In a year in which a region has been prescribed, income from livestock sales are 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.