Sustainable and efficient agriculture is an important part of Canada’s growing value-added agriculture sector. In addition to government grants and loans for agriculture that focus on future activities, agri-businesses should be aware of tax incentives as well. These favorable tax benefits incentivize Canadian agri-businesses to invest in value-added agriculture technologies, processes, and facilities.
“Value-added agriculture is defined as: The physical transformation or upgrading of any raw/primary agricultural product(s) or any agricultural byproduct or waste into a new or upgraded product. This definition excludes facilities solely dedicated to cleaning, bagging, handling and/or storing of primary products.”
-Ministry of Trade and Export Development
For example, Saskatchewan has implemented a tax rebate for capital expenditures that are $10 million or more. This program is called the Saskatchewan Value-added Agriculture Incentive (SVAI) and it is administered through the Ministry of Trade and Export Development. This rebate is applied against paid corporate income tax (CIT) for companies in the Saskatchewan province.
Successful beneficiaries of the Saskatchewan Value-added Agriculture Incentive may receive the following tax benefits once their new or expanded facilities have reached completion:
- Upon completion of a value-added agricultural facility, benefits may be claimed over the next three-to-10-year period;
- Benefit redemption is limited to:
- 20% after one year;
- 30% after two years;
- 50% after three years; and
- Remaining amounts may be dispersed for the next seven years.
- The SVAI tax benefit may be stacked with any other tax incentive or grant offered the Saskatchewan provincial government without impacting eligibility.
To learn more about the SVAI program benefits, please refer to the SVAI home page.
All applicants for the Saskatchewan Value-added Agriculture Incentive program must be located in Saskatchewan. Applicants for the SVAI program may be eligible if they meet the following criteria:
- The completion of new value-added facilities or extensions to current facilities;
- The project must exceed $10 million in expenses made for the purpose of improving capacities that meet the definition of a value-added agricultural activity such as:
- Malt producers;
- Cannabis oil processing; and
- Pea protein processors.
- Applicants must be certified by an independently qualified third-party that can verify the investments did, indeed, improve capacities.
To learn more about eligibility requirements, please refer to the Saskatchewan Value-added Agriculture Incentive program page.
The application process for the Saskatchewan Value-added Agriculture Incentive follows these steps:
- Applicants draft and submit the Saskatchewan Value-added Agriculture Incentive application for approval found here;
- Applications are reviewed by the program and, if the application meets the required criteria, the applicant will receive a letter or approval for the project;
- Upon completion of the proposed project, a request for a certificate of eligibility must be submitted to the program;
- If approved, the applicant will be supplied with a SVAI Certificate of Eligibility;
- Starting the year following reception of the SVAI certificate, the applicant will have 10 years to claim their benefit via a T2 CIT with the Canada Revenue Agency (CRA) (A claim form must be submitted each year a claim is made); and
- The Ministry of Finance will verify the applicant’s claim and either provide a rebate accordingly or a refusal with a written explanation for denial.
To learn more about how the SVAI program application process works, please visit the SVAI homepage.
The Saskatchewan Value-added Agriculture Incentive program was initiated on September 1, 2017 and is still currently active.
Government Funding for Agriculture Businesses
Government funding opportunities, such as grants and loans, are helpful ways for agriculture businesses to leverage financial support for business expansion and growth. However, taking advantage of these opportunities requires a strong approach. Taking some time to review how to build a funding plan is a great way to start.
Also, to discover more about opportunities in government funding, contact a Mentor Works representative. Lastly, this Agri-Food white paper is a great way to learn about opportunities for the sector as businesses head into the new year.