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Cattle Deferrals Could Cause You Real Tax Headaches


​If you don’t think cattle deferrals are a real tax consideration, think again. Whether you’re selling livestock through an auction or holding off on cashing that cheque, these transactions will have an effect on your taxes and should be factored into your overall strategy.

Many sellers think they can delay recording revenue from cattle sales in order to avoid paying taxes, but deferring income usually isn’t an option. If the income comes from the sale of livestock through an auction mart, the date of transfer of ownership between parties is what must be considered. When you cash the payment, whether right away or if you try to hold out for the new year, is not the determining factor.

Delaying may also cause inventory issues to arise. For AgriStability tracking purposes, the producer has to report what they own at the end of the year.

What can be deferred?

True accounts receivable can be if the cash has not been received by the end of the year. This is a good option for many producers who work on a cash-basis for tax purposes. However, you must be assured that you can, indeed, collect it.

To avoid higher taxes, and help negate the issue raised by cattle deferrals, producers can make use of different ownership structures, many of which would allow for non-calendar year-ends away from the traditional highs and lows that occur in December and January tax cattle cycle.

Ineffective tax planning, and attempting to defer receipt of payment, have become an increasing issue for producers given the profitability of the cow and calf industry over the past couple of years. In order to save the most money possible and stay on the right side of the CRA, producers need to be aware of the rules.