AgriStability - What’s New for 2018
A new 2018 Program was recently announced and, while there were only some minor changes, it is an opportunity for you to evaluate your Ag Risk Management, which includes AgriStability as an option.
AgriStability is one of the risk management programs that was offered under the Growing Forward 2 agreement on agriculture policy which expired December 31, 2017.
The Canadian Agricultural Partnership (CAP), launching in the 2018 Program year, is a five-year federal-provincial-territorial funding agreement that governs agriculture-specific programs including Business Risk Management (BRM) programs such as Crop Insurance, AgriStability, Western Livestock Price Insurance and AgriInvest.
The new program looks much like the old Growing Forward 2 program with some minor adjustments to AgriStability.
The major change to the AgriStability Program, as a result of the Canadian Agricultural Partnership, comes to the Reference Margin Limit (RML).
Previously, AgriStability benefits were calculated using the lower of:
- the conventional reference margin; or
- the average allowable expenses in the years used to calculate conventional reference margin, identified as Reference Margin Limit.
Producers are now guaranteed that the Reference Margin Limit used in their program calculations will never be less than 70% of their conventional reference margin.
This change will help producers with a low-cost expense structure which would have resulted in a low reference margin.
In addition, the CAP will also include fewer barriers to enter the program, as the application process will be simplified involving fewer forms.
New participants will only be required to submit the previous 3 years of historical financial information from the farm rather than the 5 years of information required previously.
This simplified process will make it easier for new participants to join the program, which opens for enrollment April 30, 2018.
You will receive program benefits when your program margin falls below 70% of your reference margin.
Enrolling in the Program
Like insurance for your house or car, you sign up before something goes wrong.
With AgriStability, fees are paid by April 30, before most production years begin. You can then go about your regular business, knowing AgriStability will help you in the event the unexpected happens.
Participating in AgriStability
To be eligible to participate in the AgriStability Program, your income must be derived from the primary production of agricultural commodities, provided in the program year you have:
- Carried on the business of farming in Canada
- Reported farming income (or loss) for income tax purposes
- Completed a minimum of 6 consecutive months of farming activity
- Completed a production cycle
- Submitted the required information by the deadlines
How to Apply
For new producers, applying for AgriStability is as simple as calling the appropriate AgriStability office for your province and requesting a new participant package.
The request must be made by the Enrolment/Fee deadline of April 30 for the program year in which you wish to participate.
Processing Applications (No Change)
The provinces require producers submit information annually to calculate program benefits.
Individuals (sole proprietors) must provide the income and expense information on the T1163 and T1164 forms and submit them to the Canada Revenue Agency (CRA). This information is then forwarded to the AgriStability Program.
Corporations, co-operatives and other entities are to submit all their income and expense information directly to the province. FBC does this for it’s Members on their behalf.
Program Fees (No Change)
To participate in the AgriStability program all producers must pay annual program fees.
The program fee is $4.50 for every $1,000 of covered Contribution Reference Margin, multiplied by 70 per cent. This works out to be $315 for every $100,000 of reference margin. A $55 fee is also applied to help cover administrative costs.
Note: Program fees can vary from province to province so its best to check with your provincial body.
Risk management is a core component of your tax preparation strategy
It looks at the risk trends of the farming industry today and options you have as a farmer to make sure your business thrives in good times and in bad.