Q: I am a Saskatchewan farmer and, like many others this year, am flooded out. It is late June and it doesn’t look like I can get a crop in this year. Are there any legal ramifications? Can I get some assistance?A: The year 2010 is one of the wettest springs on record. I’ve driven around Saskatchewan in the last two weeks and some areas have been devastated by the rainfall that we’ve received. I hear it is the same in other parts of Western Canada.There is relief available. The federal and provincial governments look at possibilities in providing assistance to farmers who were essentially drowned out before they got started. Announcements are yet to come, but keep an ear tuned for them.In Saskatchewan, the Saskatchewan Crop Insurance Corporation has coverage. Farmers who’ve been unable to seed by the deadline can claim a failure on their insurance and can qualify for an unseeded acreage payment on land that’s under water. Those payments should be made in 2010. As well, you may qualify for other payments.Here’s an oddity that occurs in such situations. For many prairie producers, 2009 was a strong year with a good crop. Many people deferred income into the 2010 tax year to reduce their income tax burden for the 2009 year. As well, they purchased all or most of their inputs for 2010 in 2009 to have those expenses occurring in a good year. Normally, that’s prudent financial and tax planning.Now, with an inability to seed in 2010, inputs already purchased will be kept in inventory and used in 2011, or returned for refunds. You have few expenses, but you will have received insurance payments. Your net farm income is going to be up, which can trigger additional tax consequences.In spite of good fiscal planning, you can have poor production in 2010 and end up with a tax bill. It’s bizarre, but not making money on your land can end up costing you more tax dollars than if you’d had a bumper crop.It’s time to consult your accountant to minimize your losses.
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