Farmers get break on producer levies

Reading Time: 2 minutes

Published: February 14, 2002

Ottawa is giving farmers what could amount to a $10 million tax break.

Producer associations collect an estimated $200 million every year

through checkoffs, assessments and other levies.

Approximately $30 million of the $200 million collected is spent on

funding research and development activities.

In the past, it has been impossible for Canadian farmers to receive tax

credits for those contributions.

The levies are collected by associations, which then dole out the cash

to universities, governments and private companies so there is no

Read Also

Man charged after assault at grain elevator

RCMP have charged a 51-year-old Weyburn man after an altercation at the Pioneer elevator at Corinne, Sask. July 22.

direct link between the farmer’s expenditure and a particular research

project.

And producers can’t claim the entire levy amount because a large

portion of the money collected pays for non-research related activities

such as marketing and promotion.

As a result, it has been tough for tax collectors to identify exactly

how much research an individual farmer has funded.

“The process has been very cumbersome,” said Lorne Heslop, science

policy analyst with Agriculture Canada.

“There was a number of associations that tried to (collect tax credits)

on behalf of producers but because an association is not a taxpayer,

they weren’t recognized.”

So for years producer associations lobbied the federal government to

change the tax rules.

Those consultations with the Canada Customs and Revenue Agency and

Agriculture Canada have resulted in a new application process that

gives farmers access to Scientific Research and Experimental

Development Program tax credits.

People in other industries generate $1.5 billion in tax savings a year

by accessing those credits.

Under the new process, associations must confirm with the Canada

Customs and Revenue Agency how much of the levy dollars they collect

are spent on funding research and development projects.

The association then sends a letter to its members indicating what

percent of its levy is applicable for the tax credit. Producers attach

that letter to their income tax form and claim the credit.

If the farm is a business, it qualifies for a 35 percent credit, if not

the credit limit is 20 percent. The potential tax savings for farmers

amounts to between $6 million and $10 million, said Heslop.

The Western Grains Research Foundation administers one of the largest

producer checkoffs in the country.

Producers contribute $3.7 million to western Canadian plant breeding

programs through a checkoff of 20 cents per tonne on wheat and 40 cents

per tonne on barley.

Foundation executive director Lorence Peterson said he is pleased that

farmers are now recognized for that contribution.

“Now farmers are on an equal playing field with other private investors

in research.”

Peterson said the tax credit could encourage more support for the wheat

and barley checkoff.

“Around 95 percent of prairie wheat and barley producers support the

checkoff, but this may persuade some of the others to support the

program. Every dollar helps.”

Heslop said it is likely too late for most farmers to make use of the

program for the current tax year since “we’re right in the middle of

tax season,” but the program should be in full swing for farmers next

year.

About the author

Sean Pratt

Sean Pratt

Reporter/Analyst

Sean Pratt has been working at The Western Producer since 1993 after graduating from the University of Regina’s School of Journalism. Sean also has a Bachelor of Commerce degree from the University of Saskatchewan and worked in a bank for a few years before switching careers. Sean primarily writes markets and policy stories about the grain industry and has attended more than 100 conferences over the past three decades. He has received awards from the Canadian Farm Writers Federation, North American Agricultural Journalists and the American Agricultural Editors Association.

explore

Stories from our other publications