3 June 2010 Ministerial Correspondence 2010-0364901M4 - Income deferral

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: Letter from MP asking that bees be treated as "breeding animals" for the purpose of the income deferral in subsection 80.3(4) of the Income Tax Act.

Position: Referred letter to the Department of Finance.

Reasons: The Canada Revenue Agency is responsible for administering the legislation as passed by Parliament whereas the Department of Finance Canada is responsible for developing and evaluating federal income tax policy or amending income tax law. Taxpayer's concern relates to federal tax policy.

June 3, 2010

XXXXXXXXXX
House of Commons
Ottawa ON K1A 0A6

Dear Colleague:

Thank you for your correspondence received on April 20, 2010, written on behalf of one of your constituents, concerning the income deferral deduction available to farmers under subsection 80.3(4) of the Income Tax Act.

Subsection 80.3(4) applies to taxpayers carrying on a farming business in a region that is prescribed as a drought region or a region of flood or excessive moisture. It allows a taxpayer to claim as a deduction a percentage of the amounts included in income from the sale of breeding animals. The deduction is available if the taxpayer's breeding herd at the beginning of the year decreased by at least 15% by the end of the year. The amount deducted is included in income in a subsequent tax year.

As my office recently advised your staff, the phrase "breeding animals" is defined in the statute as including certain types of horses, deer, elk, and other similar grazing ungulates, bovine cattle, bison, goats, and sheep. Because bees are not included in the definition of breeding animals, no income deferral deduction is allowed for income amounts resulting from the sale of bees.

You feel that the exclusion of bees from the definition of breeding animals is an oversight that discriminates against beekeepers, though bees are as important to farmers as other livestock and are equally affected by adverse weather conditions. You suggest that bees be accorded the same treatment as other breeding animals for the purposes of the income deferral deduction.

Your suggestion raises a matter of tax policy. The Canada Revenue Agency is responsible for administering the income tax legislation as passed by Parliament, whereas the Department of Finance Canada is responsible for developing and evaluating federal tax policy and amending tax legislation. Therefore, I have forwarded a copy of our correspondence to the Honourable James M. Flaherty, Minister of Finance, for his consideration.

I trust that the referral is helpful.

Yours sincerely,

Keith Ashfield

c.c.: The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6

André Gallant
(613) 957-8961
2010-036490
April 27, 2010