7 April 2011 External T.I. 2011-0398601E5 - Reporting Requirements - Farm Support Payments

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.

Principal Issues: Reporting requirements for farm support payments.

Position: AGR-1 must be filed with CRA when amount equals or exceeds $100.

Reasons: The law.

XXXXXXXXXX
			2011-039860
			Michael Cooke, C.A.

April 7, 2011

Dear XXXXXXXXXX :

Re: Reporting Requirements - Farm Support Payments

This is in reply to your email dated March 8, 2011, wherein you requested our views on whether certain amounts paid by the XXXXXXXXXX to XXXXXXXXXX farmers as a rebate for the cost of eligible poison for controlling gophers (rodents) on their farms are required to be reported on AGR-1 slips.

Our Comments

Pursuant to subsection 234(1) of the Income Tax Regulations ("Regulations"), every government, municipality or municipal or other public body or producer organization or association that makes a payment of an amount that is a "farm support payment" to a person or partnership is required to make an information return in prescribed form (the "AGR-1") in respect of the amount.

A farm support payment is defined in subsection 234(2) of the Regulations to include:

(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) cost or capital cost incurred in respect of farming, or,

(ii) unsowed or unplanted land or crops, or destroyed crops, farm animals or other farm output.

Based on the information provided, it is our view that the amounts paid to the farmers, whether described as a rebate or grant, would be a farm support payment described in (c) above. Consequently, the XXXXXXXXXX would be required to file any AGR-1 slips and the applicable AGR-1 Summary return (electronically to the Canada Revenue Agency where applicable) where the total amount of the farm support payment paid to the particular recipient by the XXXXXXXXXX for the particular year equals or exceeds $100. You may wish to refer to section 205.1 and section 209 of the Regulations, which respectively set out the applicable electronic filing and distribution requirements.

In addition, subsections 162(7), (7.01) and (7.02) of the Income Tax Act (the "Act") set out the late filing penalties where any required prescribed information return is not filed as and when required by the Act and the Regulations. For additional information on the electronic format to be used for filing of information returns, such as the AGR-1, please refer to http://www.cra-arc.gc.ca/esrvc-srvce/rf/menu-eng.html.

We trust that these comments will be of assistance.

Yours truly,

Sandy Parnanzone
Manager
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch