Running a profitable farm is complex. Managing costs and ensuring your farm stays on budget is no easy task. Especially as costs continue to go up for things like equipment, inputs and labour.
That’s where the AgriInvest program steps in, offering a financial cushion and encouraging Canadian producers to save for challenging times.
AgriInvest is a business risk management program offered by the Government of Canada Agriculture and Agri-Food Canada specifically for farmers. It is a self-managed producer-government savings account designed to help manage the inevitable income declines that come with operating a farm.
But how does it work? And how can you best leverage it to maximize your savings and farm income?
Let’s take a closer look at the strategic implementation of AgriInvest, and how it can help ensure farmers like you are able to take full advantage of the program.
AgriInvest Program Overview
The AgriInvest program is a self-managed, producer-government savings account in which the Government of Canada will match a portion of a producer’s contributions.
Each year producers can deposit up to 100% of Allowable Net Sales (to a maximum of $1 million) and receive a matching government contribution of 1% of your Allowable Net Sales (to a maximum of $10,000). The minimum producer contribution balance to qualify for government match is $250.
Allowable Net Sales (ANS) is gross sales minus purchases of allowable commodities.
The account is split into two funds:
- Fund 1: Producer’s deposits.
- Fund 2: Government’s contribution and any interest earned.
The producer’s contributions to Fund 1 are not taxable. Any government contributions and interest in Fund 2 are included as income for tax purposes, similar to a non-regulated savings account. Annual deposits are made rather than in instalments, so requisite planning is required by producers.
Who is eligible for AgriInvest?
A producer is eligible for AgriInvest if they earn income from the primary production of agricultural commodities, and:
- Operate a farm in Canada
- File an income tax return reporting farming income (loss) to the Canada Revenue Agency by the final filing deadline for the program year
- File an AgriInvest form reporting sales and purchases of allowable commodities by the final deadline for the program year
You can participate in AgriInvest if you meet the criteria of one of the following:
- individual producers
- partners in a partnership
- corporations
- co-operatives
- communal organizations
- landlords in a joint venture
- estates
- trusts
- limited partnerships
- Status Indians and Band Farms farming on a reserve
- custom feedlot operators
Applying to AgriInvest
The AgriInvest application process is straightforward but if it is your first time applying, you may need some assistance from an accountant or business advisor.
- Get Ready to Apply
- Be mindful of the September 30th initial (penalty-free) and December 31st final (with penalty) submission deadlines.
- Gather all necessary financial documents related to your farming operations.
- Application Completion and Submission
- Individuals submit their AgriInvest application as part of filing their farm statement.
- Corporations complete statement A application that is sent to SCIC.
- Submit the form ensuring you avoid any delays – either do it online or via mail.
Post-Application Actions
- Await your deposit notice, indicating your allowable deposit amount.
- Make your deposit adhering to guidelines and utilize both your and the Government of Canada’s contributions strategically for your farming business.
- Stay Engaged
- Engage annually with the program, ensuring you manage your funds effectively and abide by ongoing guidelines.
AgriInvest Application Deadlines
AgriInvest application deadlines are as follows:
- Deadline (without penalty): September 30th
- Deadline (with penalty): December 31st
We highly recommend ensuring your applications are submitted prior to September 30 to avoid any penalties. If further support is needed, please contact your accountant or Virtus Group’s agriculture team.
When Does AgriInvest Become Taxable?
As mentioned above, only government contributions and interest accrued in Fund 2 are taxable upon withdrawal. Contributions to Fund 1, which are the producer’s contributions, are not taxable. Fund 2 is income for tax purposes only in the year the amounts are withdrawn.
Interest rates on AgriInvest accounts will vary between financial institutions as they are determined by the institutions themselves.
Tax planning with AgriInvest may be suitable for your operation. Navigating tax implications with a knowledgeable advisor can optimize your financial management and make sure you’re getting the most out of AgriInvest, while minimizing your tax burden.
AgriInvest in Saskatchewan
Farmers in Saskatchewan are able to take full advantage of AgriInvest. The program is administered by the Government of Canada with support from the provincial government.
- Financial Matching: The Federal Government matches contributions, amplifying your saving efforts.
- Educational Initiatives: A plethora of informational and educational resources are available to assist in understanding and utilizing AgriInvest funds optimally.
- Investment Strategy Assistance: Get insight into how to strategically deploy AgriInvest funds for operational enhancements, including technological adoption, market expansion, and sustainability initiatives (source).
Article Wrap-up
In conclusion, AgriInvest is more than a savings account – it’s a strategic financial tool tailored for Canadian farmers, offering a safety net for challenging times.
In summary:
- Get AgriInvest Right: Navigate through its norms, manage your contributions, and use the fund smartly to fuel a stable future for your farm. When in doubt, talk to your accountant
- Stay on Track: Stick to the guidelines, manage your deposits well, and make sure to use your funds in a way that aligns with your farm’s goals.
It’s not just about securing your finances but about strategically advancing your farming practices, ensuring your operations are not just sustained but are also propelled towards growth and innovation. It’s about making informed, strategic choices that pave the way for a fruitful future in farming.
Understand it, use it wisely, and let AgriInvest be the safety net that helps your farm thrive.
AgriInvest Frequently Asked Questions
After your application and getting a deposit notice, you deposit up to 100% of your Allowable Net Sales (up to $1 million) into your account within 90 days. Note: Only one deposit is allowed.
For Saskatchewan producers, 2022 – T1163 Statement A can be submitted via efile or paper copy to the Canada Revenue Agency
Withdrawals from Fund 2 (that’s the government contributions and interest earned) are taxable. Best to plan withdrawals with a tax professional to navigate any potential tax implications smoothly.
