CAIS Program: Frequently Asked Questions
- 2005 CAIS Harmonized Form
- Penalties
- Combining
- Deposits / Fees
- Applying for the CAIS program
- CAIS program benefits
- CAIS program benefits calculations
- Beginning Farmers
- Mandatory opt out rules
- Production Insurance (formerly Crop Insurance)
- The CAIS program and Net Income Stabilization Account wind-down
- Miscellaneous
2005 CAIS Harmonized Form
Q. What is the CAIS Harmonized Form?
A. The CAIS Administration is taking steps to improve CAIS program
delivery and to streamline the process to apply for CAIS benefits.
Starting with the 2005 program year, individuals will now receive their income tax and CAIS forms in a single package. Individuals will complete form T1273 which combines the income tax and CAIS forms.
Corporations and cooperatives will continue to complete the Statement A and CAIS forms, and must report farming income separately for tax purposes.
The Harmonized Form is only available for individuals in provinces where the federal CAIS Administration delivers the program (British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, and the Yukon).
Program simplification is a priority for the CAIS Administration, and
is an ongoing process. We will continue to make improvements to further
streamline and simplify forms and program delivery .
Q. When will the 2005 CAIS Harmonized Form be available?
A. Individuals received their CAIS Harmonized forms in the mail in mid-February
2006.
Entities (corporations, cooperatives) with a January to July 31 year end received their forms in November 2005, while producers with an August/September year end received their forms in December 2005. All other entities with a non-calendar year end received their form package approximately two months after their fiscal year end.
For entities with non-calendar year ends, the price lists are included with the new Harmonized forms. For individuals, the price lists will be distributed separately from the forms package in early 2006. Price lists are posted on the CAIS Web site.
Q. When will the deadline be to submit the forms?
A. The initial deadline
to submit the forms for the 2005 program year was September 30, 2006.
Although the September 30 deadline has passed,
forms will be accepted until December 31, 2006. However, any benefit
you are entitled to will be reduced by $500 for each month (or each
part of the month) late.
Q. Will CRA be using the information I submit to CAIS?
A. Canada Revenue Agency (CRA) is collecting information on behalf of
the CAIS administration. The information you submit on the CAIS section
of the harmonized form is used only for processing your CAIS application
and will not be used by CRA.
Q: Will the Canada Revenue Agency (CRA) use my inventory/production
data?
A. The inventory and production information you submit will not
be used by CRA. The information submitted on your CAIS program
forms
will be
used only for calculating your CAIS benefit.
Q. Will I receive my CAIS cheque with my tax refund?
A. No. Your income
tax forms will be processed by the Canada Revenue Agency (CRA), while
your CAIS information, along with the income
and expense information you will provide, will be processed
by the CAIS
Administration.
Penalties
Q: What are the new program penalties?
Producers who miss the deadline
for sending their 2005 harmonized form or their 2006 fee will now have some
additional time to meet the program
requirements. However, missing the program deadlines will mean producers
have to pay a penalty. There are two situations in which a penalty
may be applied – when the harmonized form is submitted after the deadline,
and when the fee is paid after the deadline.
Q: What happens if I file my 2005 CAIS harmonized form after September
30, 2006?
If you do not submit your 2005 CAIS harmonized form by the September
30 deadline, under new rules you now have until December 31, 2006 to
submit your form. However, your CAIS payment will be reduced by $500
for each month
(or part of the month) late. If the penalty amount is greater than
your payment amount, your CAIS payment will be reduced to zero. The
remainder of the reduction will not be applied to any other program year.
Q: What happens if I do not pay my 2006 fee by December 31, 2006?
If you do not pay your fee by the December 31 deadline, a 20% penalty
will be added to your fee. You will have until April 30, 2007 to
pay your fee plus the penalty. If you do not pay your fee by April 30,
2007, you
will be ineligible to participate in CAIS for the 2006 program year
as well as the 2007 program year.
Make your cheque or money order payable to the Receiver General of Canada and mail it to:
CAIS program
P.O. Box 3200 Station Main
Winnipeg, MB
R3C 5R7
Combining
Q. What is combining?
A. CAIS is a "whole farm" program. This means that all sources of farm income
are included in the calculation of a participant's program margins.
"Combining" of operations takes place when applications from two or more operations are processed as one under the CAIS program. The operations are viewed together as a "whole farm" and one set of calculations is done to determine program benefits.
Q. Under what circumstances would my operation be combined?
A. Operations are combined if they don't stand alone financially, legally or
operationally. For example, a producer may have an agreement with another
producer and may be conducting significant transactions at lower than fair
market value. If the operation must rely on another operation to work as
a whole farm it will be combined. This approach ensures that CAIS benefits
are directed to producers who experience actual income declines.
Examples - Whole farm combining
Example 1: Inventory not assignable
A husband and wife both have individual cash crop farming operations and report separately to CRA. However, they share inventory storage facilities and do not differentiate stored production. As a result, crop inventories and sales cannot be properly assigned, and they will be combined for payment purposes under CAIS.Example 2: Dividing an operation
In order to better manage on-farm risk, a participant with an individual operation producing hogs and wheat decides to split his operation into an individual operation and a corporation in the program year. The individual operation maintains the grain business while the hog business is moved to the newly formed corporation. For program purposes, these operations will be combined for application processing under CAIS.Example 3: Transaction not at fair market value
A father and son are both involved in farming operations. The father owns a large herd of feeder cattle and produces feed for these animals. The son also owns cattle but does not produce any feed. The father provides feed for the son's cattle at no cost and maintains the animals on his land. Because the feed transactions between the operations are not at fair market value and cannot be quantified, the two operations will be combined for processing of the CAIS applications.
Q. Do I still have to apply if the owner of the operation I’m
combined with has applied?
A. Though the information for combined operations is combined for the purposes
of calculations, each operation must apply to the program independently.
Your operation may also be combined with producers who are not participating in the program.
Deposits / Fees
Q. Has the CAIS deposit been eliminated?
A. Yes, the deposit was replaced with a fee beginning
with the 2006 program year. Participants received a letter from the administration
with details on how to join the program for 2006 and how to pay the fee.
Q. How much is the fee and how is it calculated?
A. You will pay $4.50 for every $1,000 of reference
margin protected. Your reference margin is based on farm income information
you have already submitted to the administration. The fee is lower if
you select a lower level of protection. There is a minimum fee of $45.00.
The Administrative Cost Share (ACS) of $55.00 per account will remain
in place and will be collected at the same time as the fee.
Q. How do the three levels of protection (Maximum, Medium, Minimum)
differ?
A. Maximum Protection: You will receive
a government payment for up to 70% of a total decline in your 2006 margin.
Medium Protection: You will receive a government payment for up to 66.5% of a total decline in your 2006 margin.
Minimum Protection: You will receive a government payment for up to 56% of a total decline in your 2006 margin.
Following are examples of how the fee is calculated for different levels of protection:
- If you had a $100,000 reference margin and you chose Maximum
Protection, (calculated at 100% of your reference margin) your fee
would be $450.00 (plus the $55.00 ACS)
- If you had a $100,000 reference margin and you chose Medium
Protection, (calculated at 85% of your reference margin) your fee would
be $382.50 (plus the $55.00 ACS).
- If you had a $100,000 reference margin and you chose Minimum Protection, (calculated at 70% of your reference margin), your fee would be $315.00 (plus the $55.00 ACS)
Q. Can my Reference Margin used to calculate my fee be adjusted?
A. Adjustments to the Reference Margin can be submitted
and will be used in the calculation of your payment. However, the changes
will not be applied to the fee calculation.
Q. If I have a negative margin, should I participate in CAIS for 2006?
A. Yes, even with an overall negative margin, you may still be eligible
for CAIS benefits.
Applying for the CAIS program
Q. How do I join the CAIS program for 2006?
A. Where CAIS is delivered federally, the deadline to
sign-up for the 2006 program was September 30, 2006. If you received
an Options Notice, you were automatically enrolled for 2006 at the maximum
protection level.
You must take these additional steps to be eligible:
- Send in your
fee payment to the CAIS Administration.
- Submit your 2006 CAIS forms. Once you're enrolled in the program, the CAIS forms will be sent to you automatically in early 2007.
Producers who have not participated in CAIS previously and wish to sign-up for 2007 can request an enrolment package by contacting us toll-free at 1-866-367-8506
Q. What if I don’t want to participate in CAIS for 2006?
A. If you participated in CAIS for 2005 and do not
wish to participate for 2006, you had to advise the Administration
prior to September 30, 2006.
- If you did not advise the Administration and do not pay your fee by April 30, 2007, you will not be able to participate in CAIS again until the 2008 program year. You can advise the Administration that you do not wish to participate by phone or in writing.
Q Is it too late to sign up for the 2005 program year?
A To participate in CAIS for the 2005 program year,
you needed to select a protection level before May 31, 2005. However,
if you participated in CAIS for 2003 or 2004, you were automatically
enrolled for 2005.
If you are signed up for the 2005 program year, the deadline to submit the CAIS Harmonized form was September 30, 2006. Although the September 30 deadline has passed, forms will be accepted until December 31. However, any benefit you are entitled to will be reduced by $500 for each month (or each part of the month) late.
CAIS program benefits
Q. How do I qualify for a program payment?
A. The CAIS program is based on margins (eligible income
minus eligible expenses.) A payment is made when your margin in the current
year (program year margin) drops below your average farm income from
previous years (reference margin.)
Q. How long will it take to process my CAIS application and receive
a payment?
A. Applications are treated on a ‘first in, first
out’ basis. The CAIS Administration’s goal is to process
completed applications and issue a CAIS payment to eligible producers
within 60 days. If your application is received near or at the deadline,
this service standard changes to 90 days. You will receive a Calculation
of Program Benefits Notice once your application has been processed.
Q. Can a CAIS program benefit be deferred to the following year?
A. The payment is taxable when issued and cannot be
deferred to the following year. Payments are treated as farm income for
income tax purposes. CAIS payments are not assignable.
CAIS program benefits calculations
Q. How does the CAIS program measure income?
A. In order to measure income, your reference and program year margins
are calculated based on a production margin. The production margin
is the difference between allowable income and allowable expenses.
Only income and expenses directly related to the production of commodities
are considered allowable for production margin purposes.
Q. How is the reference margin calculated?
A. The CAIS Administration calculates production margins for each of the producer's
previous five years, and determines the reference margin using an Olympic
average. This is the producer's average production margin over the previous
five-year period, where the year with the highest margin and the year with
the lowest margin are dropped. This represents the average historical income
and forms the basis of the producer's protection under the program.
Q. How is the program year margin calculated?
A. The program year margin is based on the fiscal period for which the
producer's taxes are filed. If the producer filed taxes using the cash
method of accounting, the program year margin will be adjusted for
changes in inventories, accounts payable and receivable, and purchased
inputs.
A negative margin occurs when allowable expenses are greater than allowable income for a program year. See: Fact sheet on Negative Margins
Beginning Farmers
Q. Are beginning farmers eligible to participate in CAIS?
A. Beginning Farmers are those who have farmed for less than three years. Beginning Farmers are eligible to participate as long as they have had six consecutive months of farming activity and have completed a production cycle in the program year. If you are a beginning farmer, the CAIS Administration will create margins for the missing year(s) based on your farm’s productive capacity in the program year. Margins will not be created for any reference year in which you have (or should have) reported farming income (or loss) to CRA.
Q. How can beginning farmers sign up for the program?
A. Where CAIS is delivered federally, the deadline to sign-up for the 2006 program was September 30, 2006. If you received an Options Notice, you were automatically enrolled for 2006 at the maximum protection level.
Producers who have not participated in CAIS previously and wish to sign-up for 2007 can request an enrolment package by contacting us toll-free at 1-866-367-8506.
Mandatory opt out rules
Q. If I did not participate in CAIS for 2003, 2004 or 2005, am I automatically
out of the program?
A. Under CAIS policy, if you do not meet the full filing requirements
of the CAIS program for two consecutive years, you are ineligible to
participate for the following two program years. However, an exception
has been made for the 2003, 2004 and 2005 program years.
The following rules apply:
- If you did not meet the requirements for 2003, 2004 or
2005, you may still participate in 2006.
- If you do not meet the requirements for 2006 you may still participate in 2007 (you must meet the requirements for 2007).
Production Insurance (formerly crop insurance)
Q. Do I have to participate in Production Insurance in order
to be eligible for the CAIS program?
A. No. You do not have to participate in Production Insurance
in order to participate in the CAIS program. However, there are benefits
to participating in both. See: Production
Insurance fact sheet.
The CAIS program and Net Income Stabilization Account (NISA) wind-down
Q. What is happening to the funds in my NISA account now that
the CAIS program is in place?
A. The money in your NISA account is still owned by you, including the
government-funded portion in Fund 2. The wind down of your NISA account
has begun. You may request money from your NISA account at any time.
You may close your account or change your payment schedule at any time.
By March 31, 2009 your NISA account will be closed.
If you did not specify how you would like to withdraw funds from your NISA account,
the funds will be paid to you annually on a schedule starting March 31, 2005
and ending March 31, 2009.
Money in Fund 2 of your NISA account will be paid out to you at your request either in a lump sum or on a payment schedule.
Miscellaneous
Q. Is the CAIS program based on the accrual method of accounting?
A.
You must use the same method of accounting (cash or accrual) as you use
to report your financial information to CRA for income tax purposes.
If you report the program year information to CRA using the cash method
of accounting, the program year margin will be adjusted using a modified
cash method of accounting.
If the method of accounting is not consistent across all years in the reference period, the financial information must be converted to ensure that all reference years are reported to the CAIS program Administration using a consistent method of accounting.
Participants who reported income tax information on the cash basis, but who participated in the NISA program and reported to NISA on the accrual basis, will not be required to convert the information for these years to the cash basis, if this method of accounting was used for two or more consecutive years in the reference period.
Q. How does the CAIS program deal with structural change?
A. If a producer's operation has undergone a structural change
(eg. change in size, practice, etc.), the CAIS Administration will adjust
the producer's reference margin in order to ensure the comparison between
reference and program years is consistent and valid. The adjustment may
be waived if the structural change was the result of a disaster. See: Fact
sheet on Structural Change Adjustments
Q. Is water an allowable expense for CAIS?
A. Water used for production (irrigating crops or watering livestock)
is an allowable expense for CAIS, as it is directly related to the production
of a commodity. Water used for production should be reported as a commodity
purchase for the related commodity. Only the cost of the water itself is
allowable. Expenses for hauling water, capital items like irrigation systems
and installation, or water paid for via municipal taxes (because the cost
of the water itself cannot be broken out), are non-allowable.
The CAIS program is delivered in British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador and Yukon by the federal government. The information on this website refers to deadlines and other delivery details for these provinces only.
If you are in Alberta, Ontario, Quebec, or Prince Edward Island, the CAIS program is delivered provincially. Please click on your respective province to be linked to the provincial administration.
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| Date Modified: 2006-12-07 |  |
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