Livestock Tax Deferral Program (2025)

Tax Relief for Cattle Producers Affected by Drought or Flooding

The Livestock Tax Deferral Provision allows Canadian ranchers who sell part of their breeding herd due to drought, excess moisture, or flooding to defer a portion of that income until the following tax year. This deferral helps producers smooth out income fluctuations and rebuild herds without facing immediate tax pressure after a difficult year.

Who Qualifies

• Cattle and livestock producers located in regions officially designated (“prescribed”) by the Government of Canada for the current tax year.

• You must have sold part of your breeding herd (e.g. cows, heifers, bulls, ewes) due to drought, flooding, or feed shortages.

• The herd reduction must be at least 15% in the year of sale to qualify.

How It Works

Herd Reduction of 15-30%: 30% of income from breeding stock sales

Herd Reduction of 30% or more: 90% of income from breeding stock sales

• Deferred income is reported in the following tax year when conditions improve or you rebuild your herd.

• Deferral eligibility applies only to the sale of breeding animals, not market animals.

• Designations are made based on weather data and forage yield reports showing feed shortages or production losses.

Program Details (2025)

• The initial list of prescribed regions for the 2025 tax year was announced in August 2025, with further updates expected in fall 2025.

• Eligible areas are published each year on the Agriculture and Agri-Food Canada website.

• Ranchers in adjacent areas may also be prescribed if conditions meet the same criteria.

Why It Matters

When drought or flooding forces you to sell breeding animals early, the Livestock Tax Deferral Provision helps you:

• Delay taxable income until after your operation stabilizes.

• Ease short-term financial strain from forced sales.

• Reinvest in feed or herd rebuilding without paying immediate taxes on temporary sales income.

How to Claim the Deferral

• There is no separate application form.

• Eligibility is automatic for producers in prescribed regions.

• Simply indicate the deferral on your income tax return for the year of sale.

• Your accountant or tax preparer can reference the CRA’s guidance for Livestock Tax Deferral claims.