Ontario Farmers: Donate Food, Get Tax Credit

Year end tax planning has a new bright spot for Ontario farmers, but its real dollar benefit will depend on whether or not the farming enterprise is incorporated.

Donate food products produced on a farm to a Food Bank or School Program after December 31, 2013 and receive the new Community Food Program Tax Credit worth 25% of the fair market value of the food donated. The donee, however, must be a registered charity, to enable the tax credit and a proper fair market valuation of the food donated is required.

For unincorporated farmers, this new credit can be claimed in addition to the normal federal and Ontario donation tax credit. For corporate farmers, this is a non-refundable tax credit in addition to the deduction for the donated product.

Although a credit for donations in kind has been available in prior years, the requirement to include the fair market value of the donation in income meant that only farmers with a very low income could actually benefit from the credit. This provided no incentive for farmers with excess produce to donate it. 

NEXT TIME:  Year End Donation Planning for Ontario Farmers 

Reported by Walter Harder, DFA-Tax Services Specialist and DFA-Bookkeeping Services Specialist. Walter is based in Penticton, BC and provides support to students of a number of Knowledge Bureau tax courses including T1 Professional Tax Preparation – Basic. Walter also regularly updates EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.