AgriStability: Cash Reference Margin Pilot

Table of Contents

• What is the Cash Reference Margin Pilot?

  The federal and provincial governments of Manitoba, New Brunswick, and Newfoundland and Labrador, agreed to launch a cash reference margin pilot for producers in these provinces. Participants who file their taxes on the cash basis can join the pilot and have their reference margins calculated using the income and expenses they report for tax purposes with no accrual adjustments.

  The pilot is in effect for the 2022 and 2023 program years. Although the deadline to join the pilot for 2022 has passed, producers can join the pilot for 2023 starting in the fall of 2023.

  The 2024 program year was initially included in the pilot, however the pilot will end after the 2023 program year. Starting with the 2024 program year, a new AgriStability model will be offered to producers in Manitoba, Nova Scotia, New Brunswick, Newfoundland and Labrador, Northwest Territories and Yukon.

  Under the new model, producers will be able to choose to have their reference margin aligned with their tax filing method (cash or accrual). Information on the new AgriStability model will be made available once the details are final.

• Who is eligible for the pilot?

  You are eligible to participate if you farm in Manitoba, New Brunswick, or Newfoundland and Labrador, and you:

  • file your taxes on the cash basis
  • enrolled in AgriStability for 2023
  • complete and return the consent form by March 31, 2024

• What is the purpose of the pilot?

  A similar pilot was previously offered for the 2020 and 2021 program years. The new pilot is being offered to:

  • make it easier for new and returning participants by reducing the amount of historical information they need to provide to calculate their reference margin
  • gauge existing producers' interest in having their reference margins based on the cash versus accrual basis going forward

• Which program years are included in the pilot?

  The pilot is in effect for the 2022 and 2023 program years.

• How do I join the pilot?

  The deadline to join the pilot for 2022 has passed. To join the pilot for the 2023 program year, complete and submit an AgriStability Cash Reference Margin Pilot Consent Form for the 2023 program year by March 31, 2024.

• What is the deadline to join the pilot?

  The deadline to join the pilot for 2022 has passed. The deadline to join the pilot for the 2023 program year is March 31, 2024.

• I did not join the pilot for 2022. Can I still join for the 2023 program year?

  Yes, you may join for the 2023 program year if you are eligible for the pilot.

• If I joined the pilot for 2022, do I need to re-join the pilot for 2023?

  No, if you joined the pilot in 2022, we will automatically include you in the pilot for the 2023 program year if you enrol in AgriStability for 2023.

• If I joined the pilot for 2022, can I opt out of the pilot for 2023?

  No. If you joined the pilot in 2022, we will automatically include you in the pilot for the 2023 program year if you enrolled in AgriStability for 2023. You will not be able to change back to an accrual reference margin in either of these years. This condition is in place to ensure Agriculture and Agri-Food Canada (AAFC) has sufficient data to assess the impact of cash reference margins on the AgriStability program.

• If I am in a partnership, do all partners have to join the pilot?

  No, each partner can decide if they want to join the pilot.

• Can I join the pilot if my farm is combined with another farm?

  If your farm is combined with another farm for AgriStability, all members of the whole farm must join and meet the eligibility requirements to participate in the pilot.

• How will the program year margin be calculated under the pilot?

  The pilot only applies to the reference margin. The calculation of the program year margin remains the same, with accrual adjustments.

• How will structural change be calculated under the pilot?

  The default method for structural change for the pilot will change from the ratio method to the additive method. The ratio method works best with accrual margins as there is less variability from year to year. The additive method responds better to cash reference margins and provides a more realistic structural change adjustment.

  For more information on the additive method, see Annex C of the AgriStability Program Guidelines.

• Can I join the pilot after I receive my 2023 Calculation of Program Benefits and have my AgriStability benefits recalculated?

  No, the deadline to join the pilot is March 31, 2024. You can join the pilot at any time before the deadline by completing the consent form. You will not have the opportunity to join the pilot after the deadline passes.

• If I join the pilot, will my program fees be calculated using cash or accrual margins?

  Program fees are calculated using the contribution reference margin which is your reference margin from the previous program year. Therefore, the calculation of your program fees under the pilot will depend on how your previous year's reference margin was calculated. For some, it will be based on accrual numbers, while those who participated in the previous pilot will have their fee based on cash numbers. New or rejoining participants will continue to have their fee based on a three year industry average contribution reference margin. The contribution reference margin is calculated according to the procedures outlined in the AgriStability Program Guidelines.

• I file my taxes to the Canada Revenue Agency on the accrual basis. Can I join the pilot and have my reference margin calculated on the cash basis?

  No. The purpose of the pilot is to align your reference margin with the information you report for income tax purposes. If you file your taxes on the accrual basis, your reference margin is already calculated based on how your income and expenses are reported.

• I am a new or rejoining AgriStability participant. If I join the pilot, what information will I have to provide for you to calculate my reference margin?

  AAFC will calculate your reference margin using three years of information including your income, expenses and productive capacity for all years (unless five years of historical information are provided). AAFC will contact you for this information after we receive your completed consent form.