Deadline extended for comment on cash ticket deferral

Public consultations on the income tax treatment of deferred grain cash tickets, with an eye toward “potential elimination” of farmers’ option to defer grain income, have been extended by two months.

The federal government on Tuesday said the consultation, first announced in Finance Minister Bill Morneau’s March budget and due to end Wednesday, will instead run through to Monday, July 24.

When listed grains (wheat, oats, barley, rye, flax, canola, rapeseed) are delivered for payment at a licensed elevator, an elevator operator can issue either a cash purchase ticket or a deferred cash purchase ticket, payable in the year following the year in which the grain is delivered.

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Under current tax law, a farmer who opts for a deferred cash purchase ticket is then able to include the amount of the ticket in taxable income in that following year.

The tax treatment of deferred cash purchase tickets “is a departure from the general rule with respect to taxpayers (including other farmers),” the government said in March.

In its announcement Tuesday, the government said it’s committed to “building a fair tax system” which “includes recognizing that, over time, changes in the economy have made a number of provisions in Canada’s tax statutes less relevant than when they were first introduced.”

For that reason, the government said Tuesday, it sought public comment on the “ongoing utility, and potential elimination” of the income tax deferral available for farmers’ eligible cash purchase tickets.

During the extended consultation period, the government said, stakeholders are invited to comment on the income tax deferral, “including any appropriate transitional period or rules.”

The “historical rationale” for the current tax treatment of deferred cash purchase tickets related to “international grain shipment agreements and the Canadian Wheat Board’s former position as the sole purchaser of listed grain in Manitoba, Saskatchewan and Alberta,” the government said in March.

With the single-desk Prairie grain marketing regime deregulated, “there is arguably no longer a clear policy rationale for maintaining the tax deferral accorded to deferred cash purchase tickets received as payment for listed grains.”

Groups such as Keystone Agricultural Producers and the Western Grain Elevators Association have rejected that argument and urged the government to keep the current rule.

“This is a tool that allows (farmers) to even their income one year to another, rather than have up-and-down spikes in income, which isn’t great for them,” WGEA executive director Wade Sobkowich told the Manitoba Co-operator last month.

“It’s easier to plan your life when you know what sort of income to expect. But farmers don’t have that luxury and the deferred cash payment is one way for them to even out the peaks and valleys of their income.” — AGCanada.com Network

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