The federal government has posted its initial list of communities in which livestock producers will be eligible to defer 2008 income tax owing on sales of breeding stock due to drought.

The government has so far designated 23 rural municipalities (RMs) in southern Saskatchewan, three northern Alberta counties and the Peace River Regional District in British Columbia as eligible for the deferral.

Eligible Alberta counties include Grande Prairie No. 1, Saddle Hills and Clear Hills.

The deferrals were granted after forage yield, precipitation, soil moisture and water supply data were reviewed for 2008.

Nearly all of the eligible Saskatchewan municipalities were previously designated for the 2007 tax year as well. A producer whose area is designated in consecutive years can defer sales income ahead to the first year in which his or her area is no longer designated.

Owners of breeding livestock in the designated areas who were forced to sell all or at least 15 per cent of their herds in 2008 due to drought are eligible for the deferral.

When filing a 2008 tax return, an eligible producers can request the deferral on income tax owing on 30 per cent of income from net sales, if a herd has been reduced by at least 15 per cent, but by less than 30 per cent.

Where the herd has been reduced by 30 per cent or more, 90 per cent of income from net sales can be deferred.