Ontario has a new Food Donation Tax Credit for Farmers who donate agricultural products to eligible community food programs, including food banks.
The tax credit, the only one of its kind in Canada, will give farmers a tax credit valued at 25 per cent of the fair market value of the agricultural products they donate. Community food programs, like the Student Nutrition Program, may also benefit by receiving donations of more fresh local food for distribution to children and youth in schools across Ontario.
The tax credit and Local Food Act, 2013 are part of Ontario’s broader local food strategy to promote the good things that are grown and harvested across the province.
WHO CAN GIVE?
In order to get the credit:
- You are an Ontario resident at the end of the year
- You (or your spouse or common-law partner) carry on the business of farming in Ontario
- You have donated agricultural products to an eligible community food program in Ontario on or after January 1, 2014
- Corporations that carry on the business of farming in Ontario may also claim the credit on their 2014 corporation income tax return.
WHO CAN RECEIVE?
An eligible community food program that is:
- Engaged in the distribution of food to the public without charge in Ontario (including as a food bank), and does so either to help relieve poverty or through a student nutrition program
- Registered as a charity under the Income Tax Act (Canada).
What types of agricultural products are eligible?
Fruits, vegetables, meat, eggs or dairy products, fish, grains, pulses, herbs, honey, maple syrup, mushrooms, nuts, or anything else that is grown, raised or harvested on a farm and that may, in Ontario, legally be sold, distributed or offered for sale at a place other than the premises of its producer as food are all eligible. (Processed products, including pickles, preserves and sausages are not eligible).
How is the credit calculated?
It is calculated as twenty-five (25) per cent of the fair market value of the qualifying donations. Individuals can only claim donations for which they are also claiming an Ontario charitable donation tax credit. If the farmer is a corporation, the donation must also be claimed as a deduction for charitable donations.
Who can issue tax receipts to farmers?
Registered charities that distribute food to the public without charge in Ontario can issue receipts to farmers, just as they may issue receipts for any donations that they receive. Receipts issued for donations of goods (rather than cash donations) should record the good or goods that were donated. Farmers should keep these receipts to ensure they have the required records to claim this credit.
How do I get the credit?
You can claim the credit on your personal income tax and benefit return or on your corporation income tax return. If you file your return electronically, you need to keep all your receipts and documents for six years. If you file a paper return, attach all official receipts for your qualifying donations to your paper return.
How do charities assess the fair market value for the food they are receiving?
Eligible community food programs should use the fair market value of the goods donated. The fair market value is usually the highest dollar value you can get for those goods in an open and unrestricted wholesale or retail market, as applicable, between a willing buyer and a willing seller who are acting independently of each other. The value should be based on the quantity and quality of the goods.
Canada Revenue Agency provides general guidelines on determining fair market value: http://www.cra-arc.gc.ca/chrts-gvng/chrts/prtng/rcpts/dtrmnfmv-eng.html.
Generally, if the fair market value of the property is less than $1,000, a member of the registered charity, or another individual, with sufficient knowledge of the property may determine its value. The person who determines the fair market value of the item should be competent and qualified to evaluate the particular property being donated. For more details about the tax credit visit: http://www.Ontario.ca/FoodDonation