A Saskatoon accounting service plans to take the Net Income Stabilization Account administration to court over its audit and its plan to claw back almost $4 million from prairie farmers this year.
Barry Jolly believes farmers should be able to include freight and elevation expenses in the net sales figure used to determine how much they, and governments, can contribute to NISA accounts.
Jolly argues that because the guidelines NISA developed in 1994 for calculating net sales aren’t explicitly stated in the legislation governing the program, they cannot be enforced.
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“If the ministers didn’t agree with it, why should the farmer?” he said. “You can’t have just anyone changing the program and policy.”
He also believes the point-of-sale guidelines go against the Farm Income Protection Act.
Jolly helps farmers file taxes and NISA applications but is not an accountant or lawyer.
He said he has consulted a lawyer who works across the hall from him, and another lawyer who farms and is one of his clients.
He said he will file the case as soon as NISA decreases his clients’ accounts, something that a NISA spokesperson said will likely happen before the end of the year.
Reg Grenier said NISA administration is aware many farmers don’t agree with the guidelines for philosophical reasons.
NISA’s appeals committee received a form letter from an accounting firm for roughly 400 clients about the policy and the enforcement.
But Grenier said no one other than Jolly has raised legal arguments about the guidelines.
“There’s a mechanism in the machinery of government to make sure legislation isn’t violated, and no one’s worried about this,” he said.
Grenier acknowledged the federal-provincial agreement governing NISA doesn’t specifically mention the point-of-sale guidelines. If the agreement contained every facet of the NISA program, it would be cumbersome and expensive to run, said Grenier.
“The agreement is designed to have all the fundamental guiding principles of the NISA program,” said Grenier. “It doesn’t include every single policy.”
He said the agreement provides for NISA administration to seek advice on issues from the national NISA committee, made up of federal, provincial and farmer representatives. The committee established the point-of-sale guidelines, said Grenier, after studying the issues and talking to industry groups.
“It’s been a pretty wide-open, transparent process. There’s nothing that’s been swept under any rugs.”
NISA administration is obliged to collect overpayments to be fair to all farmers and taxpayers, he added.
Harvey Klatt, a farmer from Lanigan, Sask., thinks Jolly is doing the right thing by acting as “a watchdog for his farmers” and planning to get a legal ruling on the guidelines.
Klatt hires Jolly to prepare his income tax and NISA forms. Last summer, he was audited for his 1996 NISA contributions because he included the freight and elevation in his net sales.
He had included the freight and elevation in previous years, and doesn’t understand why NISA rules “seemed to bend and flex somewhat.”
Klatt can contribute up to three percent of his net sales, and governments will match his contribution.
When freight is worth 25 to 40 percent of the value of the commodity, the difference in net sales adds up to “big, big, big, big money,” said Klatt.
Because of low grain prices, Klatt thinks this year will be his worst since the 1988 drought. He said he needs all the NISA money he can get.
That’s why he will try to help pay for Jolly’s legal challenge, as long as other clients chip in.
“Everybody’s sleeping,” he said. “They really are not understanding what’s going on. They’re just saying, ‘Well, that’s the way it’s got to be, and we’ll just go along with it.'”
