Key issue: Safety nets
Section Chair: Mark Wales
The OFVGA provides input towards policy direction that reflects the needs of its membership in securing fair and equitable safety net programs. This section advocates for Business Risk Management (BRM) programs to support the sector, advocates for non-BRM programs to support farm & sector business development.
Safety net programming
AgriStability protects producers from large declines in their farming income caused by production loss, increased costs or market conditions.
Your allowable income and expenses for all the commodities you produce are used to calculate your margins, protecting the income of your whole farm.
More information: www.agricorp.com/en-ca/Programs/AgriStability/Pages/Overview.aspx
In Ontario, AgriInvest is delivered by Agriculture and Agri-Food Canada.
AgriInvest is a savings account with matching government contributions. You can withdraw funds at any time to alleviate risk or make other investments.
Each year, you can deposit up to 1 per cent of your allowable net sales (ANS) into your AgriInvest account and receive a matching government contribution. ANS are the net sales of most primary agricultural commodities, except those covered by supply management (dairy, poultry and eggs). Production Insurance claims are considered allowable commodities.
More information: www.agr.gc.ca/eng/?id=1291828779399
More information: www.agricorp.com/en-ca/Programs/ProductionInsurance/Pages/Default.aspx
Self-Directed Risk Management (SDRM) information
On June 29, 2011, the Ontario government announced a new Self-Directed Risk Management (SDRM)program for the edible horticulture sector.
Farmers have long been asking for a bankable, predictable and stable risk management program as the fruit and vegetable sector has been suffering through a prolonged economic downturn.
OFVGA worked collaboratively with fellow members of the Ontario Agriculture Sustainability Coalition (OASC) to develop a long term, permanent risk management solution for farmers of non-supply managed commodities.
The Self-Directed Risk Management (SDRM) program for edible horticulture is based on financial contributions by both farmers and the provincial government.
For more information, visit the Agricorp website.
2018 Capital Cost Allowance Changes
2018 Federal Fall Economic Statement
Capital Cost Allowance Changes
Disclaimer: The following information is intended to provide an update on policy changes outlined in the federal government’s 2018 Fall Economic Statement. The information should not be considered financial or legal advice. Please contact your accountant and/or business advisors or Canada Revenue Agency (CRA) to fully understand how these changes affect your specific farm operation.
2018 Capital Cost Allowance (CCA) Changes
The federal government has announced several changes to the CCA rules:
- 1. Accelerating capital cost allowance (i.e., larger deduction for depreciation) for businesses of all sizes, across all sectors of the economy, including farms, that are making capital investments:
- Generally, all CCA categories are depreciated at three times the rate at which they were depreciated previously. For example, if a capital asset was previously depreciated at a rate of 30% annually, the depreciation rate would now be 90%.
- CCA categories have not changed.
- Effect of the first-year allowance in the following years:
- Accelerated depreciation will not change the total amount that can be deducted over the life of a property - the larger deduction taken in the first year in respect of a property will eventually be offset by smaller deductions in respect of the property in future years.
- There are differences in future year impacts based on whether the capital item is depreciated on a declining or straight-line basis.
Example of how the accelerated CCA could benefit fruit and vegetable farms:
A fruit or vegetable farm will benefit from the accelerated CCA as it replaces two aging tractors for $200,000. In addition to increased efficiency from the technological advances incorporated into the new equipment, the farm will be able to deduct $90,000 for tax purposes in the first year the equipment is used, compared with $30,000 without accelerated CCA, or about $16,000 in federal-provincial tax savings.
- 2. Allowing businesses to immediately write off the cost of machinery and equipment used for the manufacturing or processing of goods:
- Applicable capital assets must follow CRA’s definitions. More information can be found at Income Tax Folio S4-F15-C1, Manufacturing and Processing.
- The manufacture of goods normally involves the creation of something (for example, making or assembling machines, clothing, soup) or the shaping, stamping, or forming of an object out of something. Processing of goods can also refer to a technique of preparation, handling, or other activity designed to create a physical or chemical change in an article or substance, other than natural growth.
- The activities of breaking bulk and repackaging for subsequent resale where there is a systematic procedure to make a product more marketable are generally considered to be processing. This may mean that washing and sorting produce falls into the definition of processing.
- Primary agricultural activities, such as growing crops, are not considered manufacturing or processing activities and capital for these purposes would not be eligible.
- 3. Allowing businesses to immediately write off the full cost of specified clean energy equipment:
- Applicable capital assets must follow CRA’s definitions. More information can be found at Income Tax Folio S3-F8-C2, Tax Incentives for Clean Energy Equipment.
- The depreciable property must:
- be situated in Canada;
- be acquired by a taxpayer for use by the taxpayer for the purpose of earning income from a business carried on in Canada or from property situated in Canada, or the property must be acquired by a taxpayer in order to be leased to a lessee who will use the property for the same income earning purpose; and
- subject to certain exceptions, not have been used for any purpose before the taxpayer acquired the property.
- There may be capital used in primary agricultural production and/or processing that would be eligible for this benefit.
- The CCA changes can be applied to qualifying assets acquired after November 20, 2018.
- The changes stay in full effect until 2023, with long-term capital projects being subject to a phase out of the changes between 2024 and 2027.