| M. Cooke | |
| (613) 957-8972 |
Agriculture CanadaAgri-Food Development BranchP.O. Box 698 922461Truro, Nova ScotiaB2N 5E5
Attention: Dr. D. M. Byers
August 25, 1992
Dear Sirs:
Re: Short-Term Cash Flow Assistance for Atlantic Hog Producers
This is in reply to your letter of August 13, 1992 in which you requested our Departments' opinion as to the taxability of the cash flow payments to the hog producers under the Atlantic Hog Cash Flow Assistance Program ("AHCFAP").
Generally, paragraph 12(1)(x) of the Income Tax Act (the "Act") brings into the income of a taxpayer any amount received as an inducement, whether as a grant, subsidy, forgivable loan, deduction from tax, allowance, etc. unless the amount received reduces the cost of property or any deductible expenditure of the taxpayer.
Based on our review of the agreement between the Ministry of Agriculture and Pork Nova Scotia and the sample agreement between Pork Nova Scotia and the "Producer" it is our view that the AHCFAP provided does not take the form of a forgivable loan. This view has been confirmed by Mr. Heath Coles of your Development and Analysis section.
Consequently since the loans are not expected to be forgiven any amounts received by a producer in a year should be treated as ordinary loan proceeds and not subject to income tax.
Yours truly,
Section ChiefLeasing & Financing SectionFinancial Industries DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch