Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Are AGR-1 slips required for payments under the ARIF and ADIP programs initiated by PEI?
Position: Yes for all ADIP payments.
Yes for ARIF payments made to farm producers.
Reasons: ARIF payments made to farm producers and all ADIP payments meet the definition of farm support payment in Reg. 234(2).
February 3, 1999
Charlottetown Tax Services Office HEADQUARTERS
Director S. Parnanzone
(613) 957-9232
Attention: Patricia Moran-Kelly
990132
Farm Support Payments
This is in reply to your round trip memorandum of January 12, 1999, asking if AGR-1 slips are to be filed in respect of payments under the two agricultural programs of the Province of Prince Edward Island which are described below.
Agriculture Research Investment Fund (ARIF)
The objective of ARIF is to stimulate and support producers and organizations to do short-term scientific research on agricultural production or marketing that is appropriate for the Province of PEI.
The eligible applicants for assistance are commodity boards, producer/industry associations, individual producers and private businesses. If the applicants are commodity boards and producer/industry associations, ARIF will match up to three dollars for each dollar contributed into the project by the applicants. If the applicants are individual producers and private businesses, ARIF will provide assistance by matching one dollar for every three dollars contributed by the applicants. ARIF will only support eligible costs, which include salaries, consulting fees, rental costs, travel, materials and supplies. ARIF’s maximum contribution for a project is $60,000.
Agriculture Disaster Insurance Program (ADIP)
Only producers who participate in the national Net Income Stabilization Account (NISA) program are eligible for a payment under ADIP. The ADIP program is designed to provide relief to individual farm operations from financial losses caused by disastrous commodity prices, rising input costs per unit, and/or unpredictable production losses. If the farm’s current year’s margin falls below 70% of the average of the previous three years’ margin (the reference margin), the farm may be eligible for an ADIP payment, to a maximum of $50,000 per year, provided the fall in margin is attributable to one or more of the following factors:
a) a decrease in commodity sale price per unit,
b) an increase in farm input costs per unit, or,
c) a loss in productivity (e.g., crops destroyed, animals diseased).
The ADIP payment is reduced by the amount by which the NISA fund exceeds 30% of the reference margin.
Whether an AGR-1 slip is required to be filed in respect of a particular payment depends on whether the payment qualifies as a farm support payment. A farm support payment is defined in subsection 234(2) of the Income Tax Regulations as including
a) a payment that is computed with respect to an area of farm land;
b) a payment that is made in respect of a unit of farm commodity grown or disposed of or a farm animal raised or disposed of; and
c) a rebate of, or compensation for, all or a portion of
i) a cost or capital cost incurred in respect of farming, and
ii) unsowed or umplanted land or crops, or destroyed crops, farm animals or other farm output.
In our view, AGR-1 slips are required to be filed for all payments made under the ADIP program. AGR-1 slips are to be filed for payments made under the ARIF program if the payments are made to farm producers.
We would mention that payments made under both the ARIF and ADIP programs would have to be reported by the recipient either as income or as a reduction of expenses or other costs, depending on the circumstances.
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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