Allowable Income and Expenses
Allowable income and expenses are those directly related to producing and selling agriculture commodities.
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 SCIC for the AgriStability Program. SCIC also accepts individual producers’ income and expense information through AgConnect.
Corporations, co-operatives and other entities are to submit all their income and expense information directly to SCIC using AgConnect or the Corporations,
Co-operatives and Other Entities form.
The additional information used to adjust a producer’s program margin is called “supplemental information.” Supplemental information includes changes in a producer’s inventory, accounts payable, accounts receivable, purchased inputs and deferrals. AgriStability adjusts program margins using supplemental information to ensure the program margin represents the overall financial health of the farming operation. For all types of farming operations, supplemental information is submitted directly to SCIC through AgConnect or on the appropriate form:
- Individuals (sole proprietors) – Supplemental Information form;
- Corporations, co-operatives, other entities – Corporations/Co-operatives/Other Entities form.
From time to time a farming operation’s size may change. This could include expanding acres, reducing acres, growing something new, reducing herd sizes, etc. This type of change is called “structural change.”
When this occurs, the farming operation’s income and expenses will be different than what occurred in the past. As a result, the farm’s historical reference margin is no longer a good comparison for the current program margin.
To provide a more accurate comparison, AgriStability adjusts the farming operation’s reference margin to reflect the composition and scale of the current operation.
Calculating Structural Change
Each year SCIC reviews a producer’s file to determine whether a structural change adjustment is necessary. For each year in your reference margin, an adjustment is made based on the farming operation’s current productive units. This calculation ensures your historical reference margin is an accurate reflection of what the margin would have been, had the operation remained the same size and scale as in the program year. If the structural change represents $5,000 and at least a 10 per cent difference in your margin, it will be subject to structural change adjustments.
Inaccurate information can impact the calculation of future benefits even if you are not in a claim position for that year.
When SCIC staff are reviewing and processing AgriStability files, an adjustment to a producer’s information is sometimes required. For example, SCIC may identify discrepancies between sales and inventory figures which require clarification. If this occurs the producer and/or his/her contact person will be asked to provide additional information to clarify the reported figures. It is important when SCIC requests additional information to process a file, it is provided within the required time frame. If the information is not provided, the file will be considered incomplete and benefits will not be calculated until the information is received.
Additionally, as reference margins are calculated based on historical information, inaccurate information can impact the calculation of future benefits even if you are not in a claim position for that year.
SCIC encourages producers to indicate if they should be combined. SCIC will also combine operations when they are determined to be related persons and:
- the operations are not legally, financially or operationally independent; or
- all or some of the transactions between the operations are above or below fair market value.
By combining operations that are not independent of each other, SCIC is ensuring AgriStability benefits are directed to producers that have experienced a decline in their program margin beyond their control.