OTTAWA, ONTARIO – Tax deferrals are being offered by the Canadian government to an expanded list of municipalities for Canadian livestock producers struggling due to the continuing drought.

"These tax deferrals will put money back in the pockets of the producers whose operations are suffering due to the cool, dry season," said Gerry Ritz, Agriculture Minister.

Eligible producers in designated areas will be allowed to defer income tax on the sale of breeding livestock for one year to help replenish breeding stock in the following year. In the case of consecutive years of designation, producers may defer sales income to the first year in which the area is no longer designated.

"Our government continues to assess the affects a cool, dry spring and summer in some parts of Saskatchewan and, as a result we have designated more areas for tax exemption on livestock sales," said Minister Blackburn, Minister of National Revenue and Minister of State Agriculture.

Producers who reduced their breeding herds by at least 15% are eligible. Thirty per cent of income from net sales can be deferred if the herd has been reduced by at least 15%, but less than 30%. Where the herd has been reduced by 30% or more, 90% of income from net sales can be deferred.

Eligible producers will be able to request this deferral when filing their 2009 income tax returns. Livestock producers are advised to contact their local Canada Revenue Agency Tax Services Office for details on the income tax provisions.

Although forage yield information is not available until later in the year, designations can be made earlier in the year based primarily on spring moisture conditions and estimates of forage yield. Early designation of eligible areas will allow producers to make informed decisions about fall and winter livestock management decisions.

Since last summer, the west central region of Saskatchewan has experienced very dry conditions. Fall precipitation was not adequate to recharge soil moisture and combined with an extremely low snow accumulation this past winter, spring soil moisture conditions were poor. Well below-normal temperatures and continued dry conditions throughout the spring have resulted in very poor pasture and forage development.

Assessment of the drought situation will continue throughout the fall and as more data about forage yields are known, tax deferral areas could be expanded.