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The Rural Voice, 1999-12, Page 55GREY County Federation of Agriculture NEWSLETTER 446 10th St., Hanover, Ontario N4N 1P9 Email: grey@ofa.on.ca Website: www.ofa.on.ca/grey 519-364-3050 or.1-800-275-9551 • The Rural Voice is provided to all Grey County Farmers by the GCFA. Tax treatment of income from woodlots changed After reviewing the new Interpretation Bulletin (IT -373R2) from Revenue Canada, discussing the matter with an OMAFRA Farm Business Specialist, and hearing a presentation on the topic at the OMAFRA Farm Tax and Business Seminar, the following is a summary of the impact on farmers of the change in tax treatment of income from woodlots. The Old Treatment: In the past, when a farmer sold standing timber, or the right to harvest the timber, to another person, Revenue Canada allowed the income from this sale to be deducted from the Adjusted Cost Base of the' property. Total nutrient Nutrient Management Plans (NMPs) have been in the forefront in the past two to three years with regard to intensive livestock operations. In this evolving process there is no unanimity among townships •or regions as to how a Nutrient Management Plan should be done or as to who is qualified to do a NMP and review it. Many concerned citizens become irate when a new livestock operation is being attempted but will not bat an eyelash when someone applies chemical fertilizer to grow crops. Some croppers apply fertilizer as they have always done and get a good crop. If manure is applied, none or insufficient benefit is given for the added nutrients. NMP's should be applied to all aspects of farming, not just livestock operations. With soil tests, nitrogen, phosphorus, and potash content will be known and only then can the proper amount of nutrients be applied according to the crop removal. Excess nitrogen or phosphorus whether from manure or chemicals will leach into the water table. EXCESS IS EXCESS. Proper soil tests, manure tests, and accurate application notes for all 52 THE RURAL VOICE By allowing this, the capital gain realized on the sale of the timber could be deferred, potentially forever. The New Treatment: Now, as explained in the new Interpretation Bulletin, and as discussed at a recent OMAFRA Farm Tax and Business Seminar, Revenue Canada requires that the income received for the sale of standing timber be treated "as a disposition of 'personal -use property'." According to this, the income received from the timber sale is a capital gain (if over $1,000),•and three-quarters of it is taxable in the year it is received. Personal -use property does not qualify for the enhanced capital gains management nutrients will protect the water and the environment for future generations. Considerable savings may be realized for some croppers by using a NMP and informed crop rotation. We as farmers should look after the land and water as a non- renewable resource. A NMP will assist in this. We should be proactive in this and have our own NMP in place whether or not the law requires it. With a good NMP growers will be more profitable than those without one. At this time I would like to wish all a happy and joyous holiday season. Merry Christmas, Happy New Year, and God bless all.0 — Submitted by Winston Kirkpatrick Bentinck Township President GREY COUNTY FEDERATION OF AGRICULTURE DIRECTORS' MEETING Thursday, December 16, 1999 1:00 p.m. OMAFRA Boardroom, Markdale Members are welcome to attend "NOTE DATE AND TIME CHANGE" exemption available to farmers. The local Federation of Agriculture questions whether it is valid to class timber from a farm woodlot as personal use property and will pursue this issue. The Main Difference: The key difference between the old and new treatments is in the ability to deter the capital gain. In the past, a capital gain received from the sale of timber could be deferred, now it is taxable in the year it is received and not eligible for exemption. Other Notes: The effective date on the Interpretation Bulletin is July 16, 1999. This means that the new interpretation will take effect for any transactions in the business year that starts after this date. For example, for a farmer who has a December 31, 1999 year end, the new interpretation will take effect on January 1, 2000. It should not be applied to any transactions that take place this fall. However, if a producer's year end is August 31, 1999, the new interpretation should be in effect for any transactions that have.taken place since September 1, 1999. The impact of this nJw. interpretation on farmers is not under appeal.0 Season's Greetings! The Grey County Federation of Agriculture Executive and Directors extend Season's Greetings to all our members. As we enter the new millennium we would like to thank you for your support of OFA. GCFA is "Farmers Working For Farmers".