As part of the federal economic update, new tax incentives are available for farmers
By Kate Ayers
Ontario producers can access a range of government programs to help finance improvements to their operations.
The Canadian Agricultural Partnership (the Partnership) is a valuable resource that producers can use to fund on-farm projects. In addition, other cost-share programs and recent additions to the federal economic update provide further options to reduce costs.
The Partnership is a five-year $3-billion initiative between the federal, provincial and territorial governments. It serves to strengthen the ag, agri-food and agri-based products sectors.
“A lot of money is on the table and all producers should be encouraged to take advantage of the funding,” Debbie Loiselle, the senior manager at Allied Associates LLP in London, said to Better Farming. Allied Associates is a chartered professional accounting firm offering accounting and tax services as well as assistance with business planning and government programs.
Loiselle provided a helpful overview of some of the eligible projects that producers may be interested in pursuing on their farms. This information is summarized below.
Some of the projects that qualify for funding through the Partnership include:
- food safety or traceability system equipment or systems improvement – 35 per cent cost sharing to a maximum of $10,000
- cover crops – 50 per cent cost-share to a maximum of $10,000
- Or 45 to 65 per cent cost-share to a maximum of $20,000 if in the geographic region for Lake Erie Agriculture Demonstrating Sustainability (LEADS) enhanced funding, which is available for producers located between Windsor and as far north as Dundalk
- new construction, modification or new technology to improve animal housing – 35 per cent to a maximum of $25,000
- equipment modifications to improve manure application – 40 per cent to a maximum of $30,000
The Ontario Soil and Crop Improvement Association (OSCIA) provides a break down of the maximum cost-share percentages and maximum support monetary coverages for on-farm initiatives offered through the Partnership.
The organization administers programs under such streams as economic development, environment stewardship, protection and assurance and LEADS.
Over the life of the Partnership agreement (2018 to 2023), the economic development stream offers support for:
- financial analysis – 50 per cent cost-share to a maximum of $2,500
- business plan development – 35 per cent cost-share to a maximum of $10,000
- marketing plan development – 35 per cent cost-share to a maximum of $15,000
- labour productivity plans
- i.e. technology or equipment to improve productivity – 25 per cent cost-share to a maximum of $100,000
The protection and assurance programs support projects that aim to:
- protect animal health
- prevent disease
- improve animal housing and handling
- ensure food safety
- protect plant health
In addition to programs and funding the governments offer through the Partnership, the fall federal economic update included tax incentives to help make on-farm investments more affordable. The feds will have these tools available through to 2024 and will then phase them out between 2024 and the end of 2027.
In this update, officials included the following incentives:
- changes to capital cost allowance (CCA) for assets available for use after Nov. 20, 2018
- assets used in manufacturing and processing will be eligible for 100 per cent write off in year of acquisition
- clean energy equipment will be eligible for 100 per cent write off in year of acquisition –however, rules limiting CCA to net income remain in place for solar energy, for instance
- most other assets will qualify for the new, accelerated investment incentive
In the latter situation, for example, in the first year of acquisition, assets will qualify for a deduction of up to three times the amount otherwise allowed. In the case of a $100,000 tractor, for example, the write off in the first year would normally be $15,000. Under the new rules, this amount will increase to $45,000, Loiselle said.
These business management tools can help farmers improve or advance their operations. Producers should speak with their financial advisers or accountants to identify programs that fit best with their business plans, Loiselle said.
“Now is a good time to invest or make upgrades to farm assets,” she added. BF