The Livestock Tax Deferral provision allows farmers who sell part of their breeding herd due to drought or excessive moisture and flood conditions in designated regions to defer a portion of sale proceeds to the following year. To determine the designated regions see the CRA website Drought Regions.
Breeding animals means deer, elk and other similar grazing ungulates, bovine cattle, bison, goats, sheet and horses that are over 12 months of age and are kept for breeding.
Breeding herd means the number determined by the formula A – (B – C)
A – is the total number of the taxpayer’s breeding animals held in the course of carrying on a farming business at that time,
B – is the total number of the taxpayer’s breeding animals held in the business at that time that are female bovine cattle that have not given birth to calves, and
C – is the lesser of the number determined as the value of B and one-half the total number of the taxpayer’s breeding animals held in the business at that time that are female bovine cattle that have given birth to calves.
Farmers are able to defer 30% of income from net sales if the breeding herd was reduced by at least 15% in the taxation year. If the breeding herd was reduced by more than 30% they are able to defer up to 90% of sales. The idea is to help farmers replenish their breeding stock in the following year. The sales need to occur in the tax year in which you wish to claim the deferral.
See the CRA website for more information – Livestock Tax Deferral Provision or give our office a call.