CAIS Program

Corporation / Co-operative and Special Individual Harmonized Form and Guide 2006

Table of Contents

What's New for CAIS

Chapter 1: Introduction to the CAIS program

Chapter 2: CAIS Participant Information

Participant Information

Participant Profile

Identification

Chapter 3: Reporting Your Income and Expenses

Income

Expenses

Statement of Farming Activities

Chapter 4: Inventories, Purchased Inputs, Deferrals, Receivables and Payables

Livestock Inventory Valuation

Crop Inventory Valuation

Livestorck Productive Capacity

Purchased Inputs

Deferred Income and Receivables

Accounts Payable

Commodity List

Program Payments List

Inventory Code Lists

Inventory Code List A

Inventory Code List B

Regional Code List

Productive Capacity List

Units of Measurement and Expense Code Lists

What's New for CAIS

Simplified Application

To further simplify the application process, the CAIS Administration has reduced the amount of information you are required to provide on the Statement A for Corporations/Co-operatives and Special Individuals. The information required to complete your inventories, productive capacity, purchased inputs, payables, and deferrals and receivables has been reduced to one page for 2006.

Late Filing Penalty

If the CAIS Administration receives the complete application after the deadline, but within three months of the deadline, the Administration will accept the application. However, the Administration will reduce any amount payable to the participant for that program year by $500 for each month (or part thereof) which has passed since the deadline. If the penalty amount is greater than the payment amount, the CAIS payment will be reduced to zero. The remainder of the reduction will not be applied to any other program year. Applications received after this three month period will not be accepted.

CAIS Fee

Beginning with the 2006 program year CAIS participants will be required to pay an annual fee to participate in the program. The amount of the fee will be $4.50 for every $1,000.00 of reference margin protected. The fee is lower if a participant selects the Medium or the Minimum protection level. There is a minimum fee of $45.00.

If the 2006 CAIS fee is not paid by the deadline of December 31, 2006, a penalty of 20% of the fee amount will be added to the amount owing. If the fee for 2006 is not paid by April 30, 2007 the participant will be ineligible to participate for the 2006 program year as well as the 2007 program year.

Competed forms must be sent to:

Winnipeg Tax Centre
66 Stapon Road
Winnipeg, MB     R3C 3M3

Note: If you have correspondence that needs to be considered in the processing of your application, do not attach it to your Statement A. You must attach your correspondence to the CAIS Additional Information and Adjustment Request Form and send it directly to the CAIS Administration at the address listed below. This form is included in the middle of this guide.

Status Indians

If you are a Status Indian farming on a reserve in Canada and do not file an income tax return, do not send your completed application form to the Winnipeg Tax Centre. Instead, send it directly to the CAIS Administration at the following address:

Canadian Agricultural Income Stabilization (CAIS) Administration
P.O. Box 3200
Winnipeg, Manitoba
R3C 5R7

For more information on the CAIS program contact us at:

Telephone toll free at:

English or French: 1-866-367-8506
Fax: 1-204-983-3947

Mailing address:

Canadian Agricultural Income Stabilization (CAIS) Administration
P.O. Box 3200
Winnipeg, Manitoba
R3C 5R7

Web site address:

www.agr.ca/caisprogram (English)
www.agr.ca/pcsra (French)

This guide contains general information only and is not intended to be a substitute for the legislation, regulations, and federal/provincial agreements which are the legal authorities for this program.

Chapter 1: Introduction to the CAIS program

This guide provides instructions on how to complete the CAI S 2006 Harmonized Statement A Corporation/Co-operative and Special Individual Form in the provinces of British Columbia, Manitoba, Saskatchewan, Nova Scotia, New Brunswick, Newfoundland & Labrador, and the Yukon. Producers not in these provinces should contact the CAIS Administration in their province to obtain the appropriate CAIS program forms.

This guide is to be used by:

• Corporations
• Co-operatives
• Communal organizations
• Limited liability partnerships that are applying as an entity
• Trusts
• Non-residents
• Status Indians who are exempt from the Income Tax Act
• Estates of deceased participants (rights and things only)

You must complete all areas on the Statement A form.

Note: Your application may be considered ineligible or its processing may be delayed if any information is missing or incomplete. Even if a third party completes your application for you, you are responsible for making sure it is complete and sent to the Winnipeg Tax Centre before the application deadline (must be postmarked on or before the deadline). Applications may be deemed late and therefore ineligible if all the required information has not been provided on the application by the deadline.

If you have one farming operation (a single farm or a partnership), complete the Statement A. The Statement A is located in the middle of this guide.

Member of a Partnership: Each partner in a partnership must complete and submit separate CAIS program forms, reporting 100% of the partnership's income and expense information.

Multiple Operations: If you are involved in multiple farming operations, complete Statement A for one operation and a separate Statement B for each additional operation. Assign an operation number to each additional operation.

If you require a Statement B but did not receive one in your package, call toll-free at 1-866-367-8506 (CAIS Administration).

Status Indians: You are eligible to participate if:

• you are a Status Indian who carries on the business of farming on a reserve in Canada and do not file an income tax return;
  
  
• you submit the information you would have otherwise reported for tax purposes for the program year and reference years. For more information please contact the CAIS Administration.

Status Indians will be deemed to have a December 31 fiscal year-end, and must provide a Social Insurance Number (SIN) or business number.

Status Indians and Band farms should submit completed forms to:

Canadian Agricultural Income Stabilization (CAIS) Administration
P.O. Box 3200
Winnipeg, Manitoba
R3C 5R7

All other participants must submit their forms to the Winnipeg Tax Centre at the address listed at the front of this Guide.

CAIS program deadlines

To participate in the CAIS program for the 2006 program year:

• you must have selected your protection level for 2006 CAIS by the deadline of September 30, 2006 or 30 days from the date on your Options Notice, whichever is later;
  
  
• you must submit your completed Statement A for fiscal year 2006 by September 30, 2007.

Late Filing Penalty

If the CAIS Administration receives your complete application after September 30, but on or before December 31 the Administration will accept the application. However, the Administration will reduce any amount payable to you by $500 for each month (or part thereof) which has passed since the deadline. If the penalty amount is greater than the payment amount, the CAIS payment will be reduced to zero. The remainder of the reduction will not be applied to any other program year. Applications received after this three month period will not be accepted.

CAIS Fee

Beginning with the 2006 program year CAIS participants will be required to pay an annual fee to participate in the program. The amount of your fee will be $4.50 for every $1,000.00 of reference margin protected. There is a minimum fee of $45.00.

If your 2006 CAIS fee is not paid by the deadline of December 31, 2006, a penalty of 20% of the fee amount will be added to the amount owing. If your fee for 2006 is not paid by April 30, 2007 you will be ineligible to participate for the 2006 program year as well as the 2007 program year.

To be eligible to receive CAIS program benefits, you must meet all of the deadlines set by the CAIS Administration. You can choose not to participate in the program for one year, but you must meet all of the deadlines for the following year. If you do not, you will be mandatorily opted out of the program for that year. In addition, you will not be eligible to participate for the following two years.

If you received an interim payment for the 2006 program year, you must meet all of the CAIS program deadlines or you will be required to pay back the interim payment.

Note: If any of the deadline dates fall on a Saturday, Sunday, or statutory holiday, you have until the next business day to submit the information required to meet that deadline.

Chapter 2: CAIS Participant Information

As a CAIS program participant, you are responsible for knowing program deadlines and understanding program policies. Additional program information may be found on the CAIS program web site. You will find the address and telephone number for CAIS at the front of this guide.

Who is eligible?

Generally, you are eligible to participate in the CAIS program if you meet all of the following criteria for the 2006 program year:

• you file a 2006 Canadian income tax return reporting farming business income (or loss). Status Indians farming on reserves do not have to file income tax returns (see page 1 for more information);
  
  
• you have completed a minimum of six consecutive months of farming activity;
  
  
• you have completed a production cycle; and
  
  
• you have met all program requirements by the established deadlines. See the CAIS Program Handbook for further information.

Note: The requirements to complete six consecutive months of farming activity and completing a production cycle may be waived if, in the opinion of the CAIS Administration, they could not be completed for reasons beyond your control.

Income derived from wood sales, as explained under “woodlots” on page 8, is not allowable for CAIS program purposes. Similarly, income derived from aquaculture and peat moss is not allowable for CAIS.

Participating in the CAIS program

To participate in the CAIS program, you must have selected your protection level for the 2006 program year by the deadline.

You must also complete Statement A and send it to the Winnipeg Tax Centre (except Status Indians, who submit their Statement A directly to the CAIS administration). The tax centre will forward the required information to the CAIS Administration. After processing your forms, the CAIS Administration will send you a Calculation of Program Benefits (COB).

If you had a production margin decline, you may be eligible to receive a CAIS payment which will be paid to you directly. Report these payments on line 9544, “Business Risk Management (BRM) and Disaster Assistance Program Payments,” on your Statement A.

Administrative cost share (ACS)

There is an annual charge of $55 per participant for administration costs payable to the CAIS Administration. See the CAIS Program Handbook for details on ACS.

Opting out

If you want to opt out of the CAIS program, you must notify the CAIS Administration in writing. Once you opt out of the program, you will not be able to participate in the year for which you have opted out. In addition, you will not be eligible to rejoin the program for the following two program years. For more information on opting out of the CAIS program, contact the CAIS Administration.

An Opt Out Request Form is available from the Administration or can be found on the CAIS Web site at the address found on the inside cover of this guide.

Requesting an Adjustment

If you change your address or would like to change the information you included on Statement A or Statement B, you must fill out the CAIS Additional Information and Adjustment Request Form and send it to the CAIS Administration. This form can be found in the middle of this guide.

If the adjustment you submit affects your taxable income, the CAIS Administration may require that the adjustment be accepted by the Canada Revenue Agency (CRA) before it is accepted for CAIS program purposes.

For more information on CAIS program adjustments and deadlines for submitting adjustments, please see the CAIS Program Handbook, available from the CAIS Administration or from the CAIS Web site. You will find the address and telephone number on the inside cover of this guide.

Note: The personal and financial information you provide to the CAIS Administration will be used only for purposes of processing your CAIS program forms, or as allowed by law (e.g., the Farm Income Protection Act, the Income Tax Act, and the Financial Administration Act). Once your CAIS program forms are submitted, the information then becomes confidential.

Information will only be used as specified on the CAIS program form or as instructed by you. Personal information is protected under the Privacy Act and is stored in the Personal Information Bank number AAFC PPU 189. Information is protected from disclosure under Section 20 of the Access to Information Act.

Completing the Forms

Section 1: Participant Information

Name and Address

Complete the Participant Name and Address area. To ensure program benefits are paid to eligible participants, it is essential that applications include the participant's correct mailing address. If CAIS records reflect an address other than the participant's, a CAIS representative will contact the participant or form preparer to verify the correct mailing address. Program benefits must be mailed to the participant's mailing address and not to a form preparer or other representative.

If a third party has filled out the form on your behalf and you would like the Administration to contact them for further information, please complete the contact person details. The Administration will communicate with your contact person as the first point of contact. Written correspondence will be sent to both you and your contact person.

Cheques and participant information such as the Calculation of Program Benefits will be mailed directly to you.

CAIS will automatically send a copy of your Calculation of Program Benefits (COB) to your contact person if you indicate “yes” to question #1 in Section 1, Name and Address. If you indicate “no”, or leave both boxes blank, a copy of your COB will not be sent to your contact person.

Section 2: Participant Profile

Enter the CAIS Participant Identification Number (PIN) in the space provided.

Enter your Social Insurance Number (SIN) in the space provided (if filing as an individual).

Enter your business number (BN) for the corporate income tax account in space provided.

Enter your business number if you are a limited liability partnership who is applying as an entity.

Trusts should enter the account number assigned by the Canada Revenue Agency (CRA).

Enter the Trust number if filing as a communal organization.

Indicate the type of farming arrangement(s) for this farming operation:

Corporation - The farming business is an incorporated entity, is beneficially owned by its shareholders, and reports its farming income on a corporate tax return.

Co-operative - The farming business is an incorporated entity, is beneficially owned by its members, and reports its farming income on a corporate tax return.

Communal organization - The farming business is carried on as a communal organization which reports farming income on a Trust tax return.

Member of a partnership - All or part of the farming business is carried on with other partners and;

• the income and expenses are recorded under the partnership's name;
  
  
• each member reports their allocation of the partnership's net income/loss to the Canada Revenue Agency (CRA).

Limited Liability Partnership - For CAIS purposes, a limited liability partnership may apply to CAIS as an entity. A list of the partners in the partnership with SINs or BNs will have to be provided on page 4 of Statement A.

Trust - The farming business is carried on by a trust holding property and reporting farming income on a trust tax return. In this case the trust, rather than the individual beneficiaries, must participate in CAIS.

Status Indian - If you are a Status Indian who carries on the business of farming on a reserve, check this box. You must provide your Band number.

Band farm - If the farming business is operating as a Status Indian Band farm, check this box. You must provide your Band number.

Province of main farmstead

Indicate the location of your main farmstead based on the province in which it is located. If your farm falls into more than one jurisdiction, enter the province where all or the majority of the gross farming income was earned over the reference period, subject to any adjustments. For more information on CAIS program adjustments, please see the CAIS Program Handbook.

If the participant is deceased, enter the date of death. If farming business income or loss was reported on the deceased participant's T1 tax return, prepare the CAIS program forms:

• in the name of the individual, noting "Estate" in the name and address area;
• using income/expenses reported on the individual's final 2006 T1 tax return(s).

Attach a copy of the individual's death certificate and the probated will (or letters of Administration) to the CAIS Additional Information and Adjustment Request Form and send it to the CAIS Administration at the same time you submit your Statement A to the Winnipeg Tax Centre. This form can be found in the middle of this guide along with the Statement A.

If the farming business was continued by the surviving spouse (or a spousal trust), prepare an additional CAIS program form:

• in the name of the surviving spouse or spousal trust;
• using the income/expenses from the spouse's 2006 T1 tax return.

Federal public office holder or public servant

Indicate if the participant is a current or former federal public office holder or public servant. If the participant is a corporation, co-operative/ commune, or a partner in a partnership, indicate "Yes" if one or more shareholders, members, or partners are a current or former federal public office holder or public servant.

If the participant, shareholders, members, or partners answered yes to the above question, indicate whether they are in compliance with the Conflict of Interest and Post-Employment Code for the Public Service. Further information on the Conflict of Interest and Post-Employment Code for the Public Service, can be found on the Web site for the Treasury Board of Canada Secretariat at www.tbs-sct.gc.ca

Location of main farmstead

A comprehensive list of provincial jurisdictions (Rural Municipalities, Counties, Districts, etc.) can be found in the Regional Code list starting on page 59.

Note: Producers in Newfoundland and Labrador are not required to complete this section.

Whole Farm Combining

In some cases, operations that report separately for tax purposes must be combined under the CAIS “whole farm” approach. This approach ensures only actual income declines, and not financial accounting procedures, trigger a payment. Generally, you should answer yes to this question if you are applying for an operation that:

1. is not legally, financially, or operationally independent from another one; or
2. has engaged in significant transactions not at fair market value.

Individuals or members in a partnership do NOT need to be combined. Further details on Combining Applications are available in the CAIS Program Handbook.

Note: Operations that need to be combined cannot be processed until all operations are eligible to apply and all program forms are received by the Administration by their respective deadlines.

Sending Additional Information

If you are sending in information to be used by CAIS to process your application in addition to the Statement A, do not submit this information along with your Statement A to the CRA. Instead, you must fill out the CAIS Additional Information and Adjustment Request Form. Attach your correspondence to the form and send it to the CAIS Administration at the address provided on the form or found on the inside cover of this guide. This form can be found in the middle of this guide along with Statement A.

If this information is needed to accurately process your application, it should be sent to the CAIS Administration at the same time that you send your Statement A to the Winnipeg Tax Centre (or the same time you submit your application to the CAIS Administration, if you are a Status Indian).

Section 3: Identification

From this part of the Statement A and on, provide information only about your main farming operation. If you have more than one operation, complete a Statement B for each additional operation. Identify each operation with successive operation numbers in the box at the top right-hand corner of each page.

Note: Be sure to number each operation in the same order used when submitting this information in prior years.

Fiscal Period

Enter the operation's fiscal period. Record the year, month and day of the beginning and end of the farming operation's taxation year. The 2006 fiscal period must end in 2006.

Partnerships: The fiscal period of a partnership must fall into the fiscal period of each partner.

Method of Accounting

If you file on the cash basis to the CRA, you must also file to the CAIS program on the cash basis. Transfer the income and expenses from your Statement of Farming Activities onto the application as per the instructions in the guide.

If you file on the accrual basis to the CRA, you must also file to the CAIS program on the accrual basis. Transfer the income and expenses from your Statement of Farming Activities onto the application as per the instructions in the guide. You must also record the change between opening and closing inventory for each individual income and expense item.

Indicate if you were involved in any of the following for this particular operation:

• A member of a feeder association
• Crop share (landlord)
• Crop share (tenant)

Chapter 3: Reporting Your Income and Expenses

Please round all figures to the nearest dollar.

Section 4: Income

Commodity Sales

Record the name, line code, and gross sale amount of each commodity on Statement A or B. See the Commodity List at the end of this guide for the list of commodity codes.

If you received a cheque for a commodity sale that is net of expenses that are recognized in the calculation of farming income (loss), report the sale to include the full value of the commodity.

Example: Your receipt from the processor shows gross apple sales of $10,000, and has pack and sell costs of $1,500 leaving you a net cheque of $8,500. You would report $10,000 as your gross apple sales and $1,500 as an expense under line code 9836, Commissions and levies.

Program Payments

Using the Program Payment List at the end of this guide, record the name, program payment code, and the amount of each program payment received as compensation for a commodity.

Record program payments not listed on the Program Payment List on line 9540, Other Program Payments.

If the program payments on your Statement of Farming Activities have been reported net of expenses that are recognized in the calculation of farming income (loss), report the full amount of the payment.

Example: Crop hail insurance program premiums of $2,000 were deducted from proceeds of $6,000, leaving a net cheque of $4,000. You would report $6,000 as a program payment and $2,000 as an expense on line 9665 - Insurance Premiums (crop or production).

Insurance Proceeds for Allowable Items

Insurance proceeds for allowable items such as fertilizers, chemicals, fuel, etc., should be recorded using line code 406.

Prescribed drought region (PDR)

Report the income you received from the sale of breeding animals as a commodity sale using the line code for the commodity. Report the amount you deferred as a commodity purchase using the appropriate line code from the list below.

When reporting the income that you deferred in a previous year, report the amount as a commodity sale using the appropriate line code from the list below.

PDR Deferred Livestock Codes

• Deferred bovine cattle 150
• Deferred bison 151
• Deferred goat 152
• Deferred sheep 153
• Deferred deer 154
• Deferred elk 155
• Deferred horse for PMU sales 156
• Deferred other breeding animals 157

Canadian Food Inspection Agency (CFIA) - Destroying livestock

Report the full amount you received under the Health of Animals Act for destroying animals as a commodity sale using program payment code 469. Report the amount of this payment you chose to deduct under commodity purchases using one of the codes from the “PDR Deferred/ CFIA Livestock Codes” chart on page 8.

When reporting the amount you deducted in the previous year as income, report the amount as a commodity sale using the appropriate code from the “PDR Deferred/CFIA Livestock Codes” chart on page 8.

Miscellaneous Items

Livestock producers

Include any insurance payments received for losses of livestock as part of the sale amount using the applicable livestock code.

If you received a Bovine Spongiform Encephalopathy (BSE) Recovery Program payment, report the amount you received under program payment code 468.

Include income generated from the use of commodities with commodity sales. For example, record income from pollination services with bee sales, stud fees with horse sales, etc. If you have used these services, record any amounts paid as a purchase of the corresponding commodity.

Woodlots

If you operated or regularly harvested a woodlot, include the sale of trees, lumber, logs, poles, or firewood as income using line code 259. This income is not allowable income for CAIS program purposes.

Income and expenses related to tree production must be generated through farming activity to be allowable under the CAIS program. Income and expenses generated in the harvesting of trees for use as firewood, construction material, poles or posts, fibre, pulp and paper, or in reforestation are considered non-allowable under the CAIS program. Income generated from these sales is excluded from production margin calculations.

Eligible tree producing operations involve the regular seeding and harvesting of trees, shrubs, herbaceous perennials or annuals, including ornamental, fruit, and Christmas trees. These operations incur normal input and harvesting costs and the crop is considered an agricultural commodity. The CAIS Administration considers the income and expenses associated with these commodities to be allowable.

Crop Share Income and Expenses

Landlords,income earned through a crop or livestock share (whether cash rent or payments-inkind) must be reported as rental income for income tax purposes. This income is therefore considered non-allowable for the CAIS program. However, where the arrangement constitutes a joint venture such that the landlord’s share in allowable expenses reasonably approximates their share in the allowable income, the income and expenses may be considered allowable. Report only your share of the income and expenses.

Tenants, if the gross sales you reported to the CRA include your landlord's share of the crop:

• record as sales the amount you reported to the CRA;
• record your landlord's share as a corresponding commodity purchase.

If you have income from crop share in addition to the entity, combine the totals from both onto one Statement.

Partners, if you are in a crop share and you have income from crop share that is separate from the partnership, complete a Statement A for one of the operations and a Statement B for the other. Otherwise, we will apply the partnership allocation to the crop share income.

Record all of the income/expense items from your 2006 Statement of Farming Activities on Statement A or B along with their designated line codes. Line codes not printed on the form are either included in the guide instructions or listed in the Commodity List and the Program Payment List at the back of the guide.

Payment in Kind

If you gave a commodity to another person as a payment-in-kind, record the value as a sale using the line code for the commodity. If the payment was made to settle a business expense, also record the value as an offsetting expense.

CAIS program payments

For income tax purposes, CAIS program payments should be reported as farming income. Record the amount as Business Risk Management (BRM) and disaster assistance payments, line 9544.

Inventory Adjustments

Do not include current year inventory adjustments (mandatory or optional) as income. Record them on lines 9941 and 9942.

Cash Advances

Cash advances, as administered under the Agricultural Marketing Programs Act, are treated as a loan and therefore should not be reported as income for both income tax and CAIS purposes.

Commodity Futures

Income transactions involving commodity futures may be recorded as a commodity sale for CAIS purposes if:

• you reported the futures transaction as farming income (loss) for income tax purposes;
• the transaction involves a primary agricultural product that you produced on your farm;
• the transaction is considered a hedging strategy, not speculation.

If your futures transactions meet the above criteria, then report them as follows:

• For futures transactions reported as a gross amount, record the income as a commodity sale using the line code for the commodity, and record related purchases as a commodity purchase using the line code for the commodity.
• For futures transactions reported as a net amount, record the net gain as a commodity sale using the line code for the commodity. Record the net loss as a commodity purchase using the line code for the commodity.

Record income from futures transactions involving commodities which you did not produce or were not considered a hedging strategy as other farming income, line 9600. Record losses from futures transactions involving commodities which you did not produce or were not considered a hedging strategy as a nonallowable expense, line 9896.

Other Farming Income

Line 9540, Other program payments

Record any program payments not listed on the Program Payment List. DO NOT record your crop insurance payments here.

Line 9544, Business Risk Management and disaster assistance program payments

Record payments you received from the following federal or provincial risk management and disaster assistance programs:

• The Canadian Agricultural Income Stabilization (CAIS) program, including interim or targeted advance payments.
• Canadian Farm Income Program (CFIP) in Saskatchewan, Manitoba, Nova Scotia, Quebec, Newfoundland and Labrador, New Brunswick, and Prince Edward Island;
• Whole Farm Insurance Pilot (WFIP) Program in British Columbia;
• Farm Income Disaster Program (FIDP) in Alberta;
• Ontario Whole Farm Relief Program (OWFRP) and the Ontario Farm Income Disaster Program (OFIDP);

If you received an overpayment from any of the programs listed above, report any amount you repaid on line 9896.

Do not report crop/production insurance using this line code. Use the codes listed on the Program Payment List at the end of this guide.

Line 9574, Resales and rebates, GST/HST for allowable expenses

Record the total resales and rebates of allowable expenses (including GST/HST rebates) unless you already reduced your expenses by these amounts.

Line 9575, Resales and rebates, GST/HST for non-allowable expenses, recapture of capital cost allowance (CCA)

Record the total rebates of non-allowable expenses (including GST/HST rebates) unless you already reduced your expenses by these amounts.

Line 9601, Agricultural contract work

Record the total of incidental farming income from such things as custom or contract work, harvesting, combining, crop dusting or spraying, seeding, drying, packing, cleaning, and treating seeds.

For further information on custom work income, see the CAIS Program Handbook.

Do not include income received from farm machinery rental on this line. See line 9614, Machine rental.

Line 9605, Patronage dividends

Enter the total patronage dividends (other than those for consumer goods or services) you received during your 2006 fiscal period.

Line 9607, Interest

Record any interest that was reported as farming business income for tax purposes.

Line 9610, Gravel

Enter the total amounts you received from the sale of soil, sand, gravel, or stone.

Line 9611, Trucking (farm-related only)

Record any trucking that was reported as farming business income for tax purposes.

Line 9612, Resales of commodities purchased

Record sales of commodities that you did not produce (i.e., bought for resale).

Record the corresponding purchases on line 9827.

Line 9613, Leases (gas, oil well, surface, etc.)

Record payments you received for leasing your farmland for petroleum or natural gas exploration. These payments will be either income or a capital receipt.

Line 9614, Machine rental

Record amounts you received from the rental of your farm machinery.

Line 9617, Custom Feeding Income

Enter the total amount you received for the custom feeding of livestock.

Please refer to the CAIS Program Handbook for information on the eligibility of custom feedlot operations for the CAIS program.

Line 9600, Other (specify)

If you have other types of farming income not listed on the application, enter the total amount of all other types of farming income on line 9600. Then list them on the blank lines provided. This will help ensure processing is not delayed. Record all non-allowable farming income in this section.

Record all non-allowable farming income in this section.

Section 5: Expenses

For CAIS program purposes, there are two types of expenses:

• allowable expenses; and
• non-allowable expenses.

Allowable expenses are the operating or input expenses you paid that directly relate to the production of your commodities.

Non-allowable expenses include interest and capital related expenses as well as costs that are not directly related to the production of your commodities.

Commodity Purchases and Program Repayments

Use the Commodity list at the end of this guide to record the line code, name and the purchase amount of each commodity bought at any stage of maturity. This includes seed, plants, transplants, livestock, and marketable products. For example, if you are an apple producer replacing damaged or dead trees, record apple tree purchases using the code for apples. If you are buying trees to expand an orchard, this amount would be a capital expenditure and would not be entered as a commodity purchase. Include expenses incurred from the use of commodities with the commodity purchases. For example, record pollination fees with bee purchases.

Record the repayment of a program benefit as a purchase using the line code for the program.

Tenants, if the gross sales you reported to the CRA include your landlord’s crop share, record the landlord’s share of the sale as a commodity purchase.

If you have an expense for the purchase of water that is used in the production of a commodity and it has not been included in your municipal taxes, include this expense with the commodity purchases. For example, if you have water brought in to water your cattle, record the expense for the water with the cattle purchases. Expenses for the transportation or hauling of the water are non-allowable.

Livestock insurance premiums

Use code 463 to record the total amount of any premiums for livestock insurance.

Do not include any premiums for private, business related (business interruption), or motor vehicle insurance. See "Line 9804 - Other insurance premiums."

CAIS PROGRAM - ALLOWABLE EXPENSES

Line 9661, Containers and twine

Enter the total amount you paid for material to package, contain, or ship your farm produce or products.

If you operated a nursery or greenhouse, enter the cost of your containers and pots for the plants you sold.

Line 9662, Fertilizers and soil supplements

Enter the total amount you paid for fertilizers and lime you used in your farming business. If you used soil supplements or other growth media, enter the amounts you paid for them here. Examples of soil supplements include mulch, sawdust, and weedmats.

Line 9663, Pesticides and chemical treatments

Enter the total amount you paid for herbicides, insecticides, rodenticides and fungicides. Insecticides include chemicals for pest control purposes as well as any predators or parasites introduced for that use. Also record the total amount you paid for chemicals used in treating water, manure, or slurry, as well as those used in disinfecting equipment and facilities.

Record seed treatment as an allowable expense if the treatment was itemized separately from the seed purchase on your original invoice. Otherwise, include the treatment as part of the commodity purchase.

Line 9665, Insurance premiums (crop or production)

Enter the total amount of deductible premiums for any crop related programs. Include premiums for hail insurance on this line. Do not include any premiums for private, business related, or motor vehicle insurance. See “Line 9804 – Other insurance premiums” on page 15 for details on other types of insurance premiums. Production insurance is the same as crop insurance.

Line 9713, Veterinary fees, medicine, and breeding fees

Enter the total amount you paid for medicine for your animals, and for veterinary and breeding fees. Examples of such fees include the cost of artificial insemination, embryo transplants, disease testing, and castration. If you used disposable veterinary supplies for your farming business, enter these costs here.

Line 9714, Minerals and salts

Record purchases of minerals, salts, vitamins, and premixes (which are mainly minerals and vitamins).

Line 9764, Machinery (gasoline, diesel fuel, oil)

Enter the total amount you paid for fuel and lubricants for your machinery used in your farming operation.

Line 9799, Electricity

Enter only the part of your electricity costs that relate to your farming business.

Line 9801, Freight and shipping

Enter the amount you paid for shipping farm inputs to your operating site and shipping farm produce to market. Do not include costs incurred when trucking for someone else on this line. These are non-allowable for CAIS and should be reported on "Line 9798 - Agricultural contract work."

Also include amounts you paid for the disposal of carcasses on this line.

Line 9802, Heating fuel

Enter the total amount you paid for natural gas, coal, and oil to heat farm buildings. Also enter your expenses for fuel used for curing tobacco, crop drying, or greenhouses.

Line 9815, Arm's length salaries

Enter the amount of gross wages you paid to your employees. Include the cost of board for hired help. Do not include salaries paid to related persons (see the definition below). For these, see "Line 9816 - Non-arm's length salaries."

Related persons are:

1) Individuals connected by blood relationship, marriage or common-law partnership, or adoption.

2) A corporation and:

• an individual, group of persons, or entity that controls the corporation;
• an individual, group of persons, or entity of a related group that controls the corporation;
• any individual related to a person described in (1) above.

Include in this total your share of Canada Pension Plan or Quebec Pension Plan contributions and Employment Insurance premiums for arm's length salaries.

Line 9822, Storage/drying

Enter the amount you paid for storing and drying commodities. Examples of such costs include amounts paid for storage and drying services, air treatment expenses, and the purchase of germination inhibitors and other preservative agents. Electricity and heating fuel costs incurred should be entered on lines 9799, "Electricity," and 9802, "Heating fuel," respectively.

Line 9830, Prepared feed

Enter the total amount you paid to buy feed for your livestock.

Line 9831, Custom feeding

Enter the total amount you paid to have your livestock custom fed.

Line 9836, Commissions and levies

Enter the amount you paid in commissions and levies incurred in the sale, purchase, or marketing of commodities. Also include amounts paid in levies to marketing boards, except those due as a result of penalties or fines you incurred. Producers marketing fruit or vegetables through a co-op should enter any pack and sell expenses here.

CAIS PROGRAM - NON-ALLOWABLE EXPENSES

Line 9760, Machinery (repairs, licences, insurance)

Enter the total amount of repair, licence fee, and insurance premium expenses you incurred for your machinery.

Line 9765, Machinery lease/rental

Enter the expenses you incurred for leasing machinery used to earn your farming income. If you lease a passenger vehicle, see "Line 9829 - Motor vehicle interest and leasing costs."

Line 9792, Advertising and promotion costs

Enter the expenses you incurred for advertising and promoting your farm products.

Producers marketing fruit or vegetables through a co-op should NOT enter any pack and sell expenses here. These expenses should be reported under "Line code 9836 - Commissions and levies."

Line 9795, Building and fence repairs

Enter the amounts for repairs to fences and all buildings you used for farming, except your farmhouse.

Line 9796, Land clearing and draining

Enter the total amount for the expenses listed below. In most cases, you can deduct the costs for:

• clearing the land of brush, trees, roots, stones, and so on;
• first ploughing of the land for farm use;
• building an unpaved road; and
• installing land drainage.

Line 9798, Agricultural contract work

Enter the expenses you incurred for custom and contract work in your farming business. For example, you could have had a contract with someone who cleaned, sorted, graded, and sprayed the eggs your hens produced, or someone who had facilities to age the cheese you produced. You could have also contracted someone to do your harvesting, combining, crop dusting, or contract seed cleaning.

For CAIS program purposes, agricultural contract work is a non-allowable expense. However, if you have contract work receipts that are itemized, enter the amounts of the contract work that pertain to the allowable portions, such as fuel, fertilizer) on the appropriate lines as allowable expenses. Enter on line 9798 any amounts that are non-allowable expenses.

Line 9804, Other insurance premiums

Enter the total amount of business related insurance premiums you paid to insure your farm buildings, farm equipment (excluding machinery and motor vehicles), and business interruption.

Do not include any premiums for hail insurance or livestock on this line. See Line 9665, Insurance premiums, and/or Livestock Insurance Premiums on pages 12 and 13 for information on where to report these premiums.

Line 9805, Interest (real estate, mortgage, other)

Enter the total amount of interest you paid on money you borrowed to earn farming income, such as interest on a loan you used to buy a baler. However, do not include the interest on money you borrowed to buy a passenger vehicle used in your farming business. Include this amount under "Line 9829 - Motor vehicle interest and leasing costs.

Line 9807, Memberships/subscription fees

Enter the amount of annual dues or fees you paid to keep your membership in a trade or commercial farming association

If you received an AGR-1 slip with a positive amount in box 14, and the amount of your CAIS program payment does not have your ACS fee already deducted, enter the amount you paid for your ACS on this line.

Line 9808, Office expenses

Enter the amount of office expenses, such as stationery, invoices, receipt and accounting books, and any other office supplies.

Line 9809, Legal and accounting fees

Enter any legal fees you incurred for your farming business. Also, enter any accounting or bookkeeping fees you paid to have someone maintain your books and records, and to prepare your income tax return and GST/HST returns.

Line 9810, Property taxes

Enter the total amount of land, municipal, and realty taxes you paid for property used in your business.

Line 9811, Rent (land, buildings, pastures)

Enter the total amount of rent expense you paid for land, buildings, and pastures you used for your farming business.

If you farmed on a crop share basis and paid your landlord a share of the crop, add the fair market value of the crops you gave your landlord to your income as a commodity sale. This amount should represent what you would have paid in cash to your landlord for rent. Deduct the same amount as a commodity purchase.

Line 9816, Non-arm's length salaries

Enter the amount of gross wages you paid to related persons. For a definition of related persons, see "Line 9815 - Arm's length salaries."

Line 9819, Motor vehicle expenses

Enter the amount of motor vehicle expense that was incurred for farming business use.

Line 9820, Small Tools

Enter the amount of expenses you incurred for small tools.

Line 9821, Soil testing

Enter the amount of expenses you incurred for testing soil samples.

Line 9823, Licences/permits

Enter the total of annual licence and permit fees that you incurred to run your business.

Line 9824, Telephone

Enter your telephone expenses related to your farming business.

Line 9825, Quota rental (tobacco, dairy)

Enter the amount of expenses you incurred for quota rentals in the fiscal year.

Line 9826, Gravel

Enter the amount of expenses you incurred for gravel used to earn farming income in the fiscal year.

Line 9827, Purchases of commodities resold

Enter purchases of commodities that you bought for resale and then sold. Enter the corresponding sales of commodities purchased for resale on "Line 9612 - Resales of commodities purchased."

Line 9829 - Motor vehicle interest and leasing costs

Enter the leasing costs for your motor vehicle or the interest on the money you borrowed for a motor vehicle.

Line 9935, Allowance on eligible capital property

Enter the annual allowance calculated for capital property from the operation's Statement of Farming Activities.

Line 9936, Capital Cost Allowance

Enter the amount of capital cost allowance (CCA) you calculate on all the eligible assets used in your farming operation.

Line 9937, Mandatory Inventory adjustment - prior year

Record the total of any mandatory inventory adjustments (prior year) from the operation's Statement of Farming Activities.

Line 9938, Optional inventory adjustment- prior year

Record the total of any optional inventory adjustments (prior years) from the operation's Statement of Farming Activities.

Line 9896, Other (specify)

The expenses listed on the form are only the most common ones. If you have other farming expenses, non-allowable for CAIS program purposes, that are not listed on the form, enter the total amount on line 9896. Then list the items on the blank lines provided under line 9896.

You may have received an overpayment from one of the programs identified on lines 9540 and 9544. Use line 9896 to record any overpayments which you repaid.

Record losses from futures transactions involving commodities which you did not produce or were not considered a hedging strategy.

Section 6: Statement of Farming Activities

The information on the Statement of Farming Activities section of the form is used to verify that the information reported on your CAIS form is the same as what you reported to the CRA. Completion of this section is mandatory.

If you are a Status Indian and do not file a tax return, skip this section. Please ensure that you fill out Shareholder/Member and/or Partnership Information section(s) if applicable.

Use the operation’s Statement of Farming Activities to complete the following information.

Line 9959, Gross farming income

Record the gross farming income from the operation's Statement of Farming Activities.

Line 9968, Total farming expenses

Record the total farming expenses from the operation's Statement of Farming Activities.

Line 9969, Net farming income (loss) before adjustments

Record the net farming income (loss) before adjustments from the operation's Statement of Farming Activities.

Line 9941, Optional inventory adjustments/current year

Record the total of any current year optional inventory adjustments from the operation's Statement of Farming Activities.

The optional inventory adjustment applies to you only if you use the cash method of accounting for income tax.

Line 9942, Mandatory inventory adjustments/current year

Record the total of any current year mandatory inventory adjustments from the operation's Statement of Farming Activities.

The mandatory inventory adjustment applies to you only if you use the cash method of accounting for income tax.

Line 9944, Net farming income (loss) after adjustments

Record the net farming income (loss) after adjustments from the operation's Statement of Farming Activities.

Line 9946, Net farming income (loss)

Record the net farming income (loss) from the operation's Statement of Farming Activities.

SHAREHOLDER/MEMBER INFORMATION

Corporations, use your Statement of Share Capital to complete the following.

Line 865, Number of members in cooperative

Complete this line only if the operation is a cooperative.

Line 854, Total number of outstanding common shares (voting and non-voting)

Enter the total number of outstanding common shares (voting and non-voting) held by shareholders.

Name of shareholder/member

Enter the name and Social Insurance Number (SIN) of the shareholder/member or group of related shareholders/members who have controlling interest in the corporation. When a corporation is a shareholder, list the names and Social Insurance Numbers of the participating shareholder or group of related shareholders that has controlling interest in that corporation. Attach a separate sheet if necessary.

Line 855, Number of common shares (voting and non-voting) per shareholder

Corporations, enter the number of common shares held by each shareholder(s) listed.

PARTNERSHIP INFORMATION

Complete this section only if the operation is a partnership.

Partnership Name

Enter the partnership's name.

Partners' Names

Record the name of each individual, corporate or co-operative partner, starting with the participant's name.

If another partnership is a partner, list the names of the partners in that partnership.

Percentage (%) Share

Record each partner's percentage share based on the allocation of partnership net income/loss reported to the Canada Revenue Agency unless:

• interest has been paid on partner's capital; or
• salaries have been paid to partners.

In these cases, exclude these amounts in determining the partner's percentage share.

If another partnership is a partner, determine the beneficial ownership of each individual member.

Example: The Smith & Smith Partnership owns 60% of the Sunny Skies Partnership. Since Fred Smith Ltd. and Mary Smith Ltd. each own 50% of the Smith & Smith Partnership, each corporation has a 30% beneficial ownership in the Sunny Skies Partnership.

SIN or BN

Enter the Social Insurance Number (SIN) for each individual partner.

Enter the Business Number (BN) for corporate or co-operative partners if applicable.

Chapter 4: Inventories, purchased inputs, deferrals, receivables and payables

Completing your CAIS forms:

All participants must complete all sections on page 5 of the Statement A that are relevant to their farming operation (and if necessary, Statement B). If you file to the CRA on the accrual basis, only complete certain parts of the crop inventory, livestock inventory, as well as the productive capacity section if it applies to you.

Note: If this page of the form does not provide you with enough lines in each section to supply us with all your farming information, you should attach a second copy of page 5 to your form with the remainder of the information on it.

Historical Information for New Participants:

The historical information you provide is used by the CAIS Administration to calculate your reference margins. It is also used to adjust your reference margins, where necessary, to account for any structural change that may have occurred in your farming operation. More information on structural change can be found on the CAIS program Web site.

If this is the first year you have applied to CAIS or you have “skipped” a year(s), please contact the CAIS Administration for the forms needed to gather this information.

Note: Your application may be considered ineligible or its processing may be delayed if any information is missing or incomplete. Even if a third party completes your application for you, you are responsible for making sure it is complete and sent to the Winnipeg Tax Centre before the application deadline(postmarked on or before the deadline).

Do not send in any additional information, such as historical information or worksheets, to the Winnipeg Tax Centre. All additional information must be sent to the CAIS Administration attached to the CAIS Additional Information and Adjustment Request Form. This form can be found in the middle of this guide or on the CAIS program Web site.

CAIS Program Codes:

When filling out page 5 of the Statement A you will need to use the following code lists:

• Inventory Code List A and B: Used to identify codes and descriptions for commodities you will be listing on page 5 of the program forms. These lists begin on page 32 of this guide.
  
  
• Units of Measurement Code List: Used to fill in column ‘c’ of the Crop Inventory (section 8). This list can be found on page 64 of this guide.
  
  
• Expense Code List: Used to fill out Purchased Inputs (section 10) and Accounts Payable (section 12) on page 5. This list can be found on page 64 of this guide.
  
  
• Commodity List : Used to identify codes and descriptions of commodities for sections 10, 11, and 12 on page 5. This list begins on page 28 of this guide.
  
  
• Program Payment List: Used to identify codes and descriptions for Deferred Income and Receivables (section 11). This list begins on page 31 of this guide.
  
  
• Productive Capacity List: Used to identify codes and the units required for reporting “other” commodities that are not listed on the productive capacity (Section 9) of the Statement A. This list begins on page 62 of this guide.

End of Year Prices (EYPs) for Commodities listed under Inventory Code List A:

You are not required to provide EYPs for the Crop or Livestock Inventory of your program forms if the commodities you are reporting are found under Inventory Code List A.

A CAIS Program Price List is included with your forms and guide package, which includes the EYPs for commodities listed under Inventory Code List A. The CAIS Administration will use these EYPs when processing your application.

If you do not feel that the EYPs in the CAIS Program Price List are appropriate to your farm, you may use EYPs other than those in the CAIS Program Price List only if you can demonstrate that:

• your commodity is substantially different than the commodity listed on the published price list; or
• your method of marketing the commodity was substantially different than the general marketing practice reflected in the published price list.

In either of these cases, you may use EYPs based on sales or purchases of the specific commodity in your name and occurring within 30 days either before or after your fiscal year-end. For your own EYPs to be accepted, you must send copies of receipts and/or supporting documents that substantiate these EYPs to the CAIS Administration using the CAIS Additional Information and Adjustment Request form. This form and any supporting documents should be sent to the CAIS Administration at approximately the same time you submit your application to the Winnipeg Tax Centre, or within your adjustment time frame. Please see the CAIS Program Handbook available from the CAIS Administration or from the CAIS Web site, for information on adjustments.

The CAIS Administration reserves the right to determine whether submitted EYPs are reasonable for all of your inventory.

End of Year Prices (EYPs) for Commodities listed under Inventory Code List B:

You must provide EYPs for both the Crop and Livestock Inventory commodities you are reporting on your program forms that are listed under Inventory Code List B. The EYP you provide for your commodity must be based on the estimated market prices at year end. Although it is not mandatory to provide documentation supporting your prices for these commodities, doing so will assist the Administration to process your application and will increase the likelihood of your price being accepted. Supporting documentation includes:

• receipts from sales or purchases of the commodity; or
• commodity specific price information from appropriate commodity marketing agencies.

For supporting documentation to be considered, it must be submitted to the CAIS Administration using the CAIS Additional Information and Adjustment Request form. This form and any supporting documents should be sent to the CAIS Administration at approximately the same time you are submitting your forms to the Winnipeg Tax Centre or within your adjustment time frame. Sending the information in at the same time you submit your forms to the CRA ensures that the CAIS Administration has the information at the time your program forms are being processed. The CAIS Administration reserves the right to determine whether submitted EYPs are reasonable for all of your inventory.

Provincial prices are collected from Statistics Canada, Agriculture and Agri-Food Canada (AAFC), the Canadian Wheat Board (CWB), provincial agriculture departments, and commodity organizations.

When submitting additional information such as receipts or supporting documentation, please refer to page 7, Sending Additional Information.

Organic Commodities: Producers who are reporting organically produced commodities must be able to provide organic certification upon the request of the CAIS Administration.

Section 7: Livestock Inventory Valuation

You must complete this section of Statement A if you carried over livestock in your inventories from your 2006 fiscal year to the following fiscal year.

Note: If you filed to the CRA on the accrual basis for all years, do not complete column (d).

Check the “Yes” box for a decrease in productive capacity if you feel this operation has undergone a downward structural change specifically because of disaster circumstances during the program year. A decrease in productive capacity means a decrease in the overall amount that you can produce.

For example, producers who had their livestock ordered destroyed by CFIA due to disease should check “Yes” to a decrease due to disaster circumstances.

Livestock Lease Agreements

If you are involved in a lease agreement, or if you own a portion of an animal, list only your share (e.g., ½ bull).

Lessee: If you lease a breeding herd but take only a percentage of the calf crop, list only your share of the herd based on your share of the calf crop, using the leased cattle code 8134.

Example: If you lease 100 cows but take only 60% of the calf crop, report only 60 cows under code 8134, Breeding Females, Leased (not owned). You would also then report the corresponding number of calves (according to your lease agreement) using the appropriate code for their weight class.

Lessor: If you own cows but lease them out and take a percentage of the calf crop, you should record 100% of your cows on the Livestock Inventory using the applicable codes found in the Inventory Code Lists. Do not use code 8134, Breeding Females, Leased (not owned). You would also then report the corresponding number of calves (your share according to the lease agreement) using the appropriate code for their weight class.

How to complete the columns:

Columns a and b: List all livestock by code and description that you had on hand at the end of your 2006 fiscal period. List each class of livestock separately. Use Inventory Code Lists A and/or B to identify each code and description for each livestock class.

Column c: Indicate the number of head of each livestock class that you had on hand at the end of your 2006 fiscal period.

Note: You must use actual number of head. Do not round numbers, and do not enter dollar values instead of number of head.

Column d: You will only need an EYP to value each class and species of livestock if they are found under Inventory Code List B. If the livestock category you are reporting is listed under Inventory Code List A, leave the EYP column blank.

Section 8: Crop Inventory Valuation

You must complete this part of your Statement A if you meet any of the following criteria:

• you produced or seeded crops or forage (with the expectation of harvest) during the program year;
• you had unseedable acres in the program year (see page 22 for an explanation of unseedable acres);
• you carried over crops or forage in your inventories from your 2005 fiscal year into 2006 (even if you did not produce the crop again in 2006); or
• you carried over crops or forage in your inventories from your 2006 fiscal year to the following fiscal year.

This part of the form is used to measure your crop and forage inventory change from the ending amount you reported for 2005 to the ending amount in the 2006 program year. This part of the form is also used to establish that your farm has completed a production cycle.

Provide the contract or identification numbers for any production (crop) insurance relating to the crops listed on this page.

Check the “Yes” box for a decrease in productive capacity if you feel this operation has undergone a downward structural change specifically because of disaster circumstances during the program year. A decrease in productive capacity means a decrease in the overall amount that you can produce.

For example, producers who were unable to seed or harvest some or all of their land due to excessively wet or dry conditions, should check “Yes” to a decrease being due to disaster circumstances.

Note: If you filed to the CRA on the accrual basis for all years, do not complete column (g).

Landlords/Tenants

If you are a tenant involved in a crop share, list only your share of the acres and quantities. Landlords are not eligible unless their share of the revenue is in accordance with their share of the CAIS eligible expenses. This is considered a joint venture.

Example: Joe rents 300 acres from Bill on terms that he receives 2/3 of the crop, and Bill pays 1/3 of the eligible expenses. In 2006, the rented land produces 300 tonnes of wheat. Joe, the tenant, will report 200 acres and 200 tonnes of wheat (2/3 of both the acreage and the production). Bill, the landlord, will report 100 acres and 100 tonnes of wheat (1/3 of both the acreage and the production).

Perishable Horticulture Crops

For a commodity that is considered a perishable horticulture crop for CAIS purposes (i.e., a horticulture crop that spoils or decays easily and cannot be stored for periods longer than 10 months, such as potatoes, apples, carrots, etc.), adjustments are made on an accounts receivable basis, and not on an inventory valuation basis.

Do not record ending inventories for perishable crops. Report the Quantity Produced from your 2006 fiscal period. Do not report any production from the previous fiscal year.

See Section 11: Deferred Income and Receivables on your Statement A to report any income from sales of 2006 crops that are received in 2007.

Planting Densities for BC Apples and Sweet Cherries

BC producers who are reporting apples or sweet cherries on section 8, crop inventory valuation, must ensure that the correct code is used according to age and planting density. These codes are found in Inventory Code List B, which begins on page 38 of this guide. The breakdown of planting densities are identified below.

Apples:

• Low density: less than 500 trees per acre.
• Medium density: between 500 and 999 trees per acre.
• High density: 1000 or more trees per acre.

Sweet Cherries:

• Low density: less than 500 trees per acre.
• High density: 500 or more trees per acre.

Unseedable Acres

Be sure to report all acres that you would normally have seeded in the program year, but could not due to your land being too wet or too dry, beside “Unseedable Acres” near the bottom of the Crop inventory valuation. Report all summerfallow and pasture/wasteland acres on the designated lines.

Unharvestable Acres

If you grew a commodity and expected to be able to harvest it in the program year, but could not due to reasons beyond your control, report the commodity and acres on your crops inventory and then report your production as zero.

Standing / Unharvested Crops

If your fiscal year-end is such that your farm always has a standing crop (e.g., July 31), do not include the standing crop in inventory.

If your fiscal year-end is such that a standing crop occurs in some years because harvesting may or may not have been completed by fiscal year-end (e.g., September 30), include the standing crop in inventory. Fall and winter crops should also be reported in this manner. Once the crop has been reported using the correct inventory code for that commodity, use code 6826, Harvest Discount Allowance to indicate the total acreage (regardless of the commodity) that was still standing at your fiscal year-end.

Example: You had a total of 400 acres seeded to flax. You were only able to harvest 250 of these acres before your fiscal year-end, leaving you with 150 acres still standing. Therefore, on your crops inventory you would report 400 acres for flax, reporting the actual harvest amount you received from those acres. You would then report 150 acres as standing using code 6826, Harvest Discount Allowance.

Snowed-Under Crops

Snowed-under crops are considered to be inventory and should be reported on a separate line on the crop inventory. Report the actual harvested amount after the harvest has been completed. If the crop was not salvageable, indicate a quantity of zero.

Once the crop has been reported using the correct inventory code for that commodity, use code 6826, Harvest Discount Allowance to indicate the total acreage (regardless of the commodity) that was snowed under.

Example: You had a total of 350 acres seeded. 100 acres were seeded to canola while the other 250 acres were seeded to barley. You were able to harvest 80 of your canola acres and 200 of your barley acres before the remainder of your crops were snowed under. Therefore, on your crops inventory you would report 100 acres for canola and 250 acres for barley, reporting the actual harvest amount you received from those acres. You would then report 70 acres as snowed under using code 6826, Harvest Discount Allowance.

EYPs applied to both standing and snowedunder crops will be reduced by a harvesting allowance as determined by the CAIS Administration.

Berry Producers

In some operations where early harvesting of berries is possible, a second planting of another commodity may occur. If there is expectation of harvest for both commodities in the same program year, then you would report the acreage and production on the crop inventory page for each commodity.

HOW TO COMPLETE THE COLUMNS:

Column a: Use Inventory Code List A and/or B to identify each crop grade and variety. Leave the code blank if the commodity is not listed in the Inventory Code Lists.

Column b: List all commodities that you produced, or had on hand at the end of your 2006 fiscal period. List each grade or variety of crop separately (e.g., list #1 Wheat 15% separately from #1 Wheat 12.5%).

Column c: Enter the code for the unit of measurement used to measure the commodity you are reporting. Commodities must be reported using units of measurement (e.g., tonnes), not dollars. Use the same unit of measurement for all entries in a single row. Refer to the Units of Measurement Code List to complete.

Column d: Indicate the number of acres used to produce each crop. List only those acres for crops that produced, or should have produced, a crop during the program year. For commodities not measured in acres, use the unit of measurement considered standard for that commodity. For example, greenhouse operations must report their unit of measurement in square metres.

Column e: Indicate the quantity of the crop that was produced in the program year.

Column f: Indicate the quantity of crop you had at the end of your fiscal period.

Column g: You will only need an end of year price (EYP) to value crops listed under Inventory Code List B. If the commodity you are reporting is listed under Inventory Code List A, please leave the EYP column blank.

Section 9: Productive Capacity

The CAIS program uses the information on this part of page 5 to adjust your reference margins, where necessary, to account for a structural change that occurred in your farming operation.

Livestock Lease Agreements

If you lease animals but do not take 100% of the revenue from the animal, report only your share of the agreement.

For example, if you lease 100 cows but only keep 60% of the calf crop, report 60 cows and follow the instructions below for cow-calf operators.

For commodities not listed here, refer to the Productive Capacity List, and report the items under “Other.”

Productive Animals

Cow-calf and farrowing operations should provide a breakdown of the number of females that have calved or farrowed for this operation within this year. Calves/piglets born in the program year are automatically factored in with each cow/sow in this category. Calves/piglets, therefore, should not be reported as feeders in the same fiscal period they were born regardless of whether they were weaned, sold, or held over to sell in a different fiscal period. Calves/piglets that are held over and sold in a different fiscal period would be reported as feeders at that time (if they have had an appreciable gain in that fiscal period).

Number of Feeder Livestock - Cattle

Enter the number of animals fed. In order to be considered a fed animal, the producer must have made an appreciable contribution to the growth and maturity of the animal in the program year (excluding all breeding animals, culls, and animals that have not been weaned and weaned animals born in the program year). An appreciable contribution is defined as 90 kg (200 lbs) weight gain or a minimum of 60 days on feed for cattle.

Categorize the animals fed based on the sale weight, if sold in the program year, or expected sale weight, if not sold in the program year.

Note: Feeder categories can include both animals born on the farm (if not reported in same year they are born) and purchased animals. Custom fed livestock should be reported under the Custom Fed category.

Number of Feeder Livestock – Hogs

Enter the number of animals fed. Animals fed should not include breeding animals, culls, animals that have not been weaned, and weaned animals born in the program year. Categorize the animals fed based on the sale weight, if sold in the program year, or expected sale weight, if not sold in the program year.

Example: You purchased, fed, and sold 100 Isoweans to weanling weight (8 to 50 pounds) and have fed another 100 feeder hogs (50 pounds to slaughter). Assuming that all animals had an appreciable contribution in the program year, you would report 100 Hogs, Nursery (fed to 50lbs), and 100 Hogs, Feeders (fed over 50lbs).

Custom Fed livestock (not owned)

Enter the number of animal feed days. Animal feed days is calculated as the number of animals x number of days each animal was fed. For example: 100 animals fed for 3 months = 100 x 90 = 9000 feed days.

Supply Managed Commodities

Enter the amount of quota/contract held.

Other (specify below)

Use the Productive Capacity List on page 63 of this guide to determine the code and the units needed to report your commodity that does not fit into the above categories.

Section 10: Purchased Inputs

All participants, except those who filed to the CRA on the accrual basis, must complete this part of the Statement A if it is relevant to their farming operation. Examples of inputs include fuel, chemicals, purchased seed, etc.

HOW TO COMPLETE THE COLUMNS:

Code and Description

For each item you are listing, please enter the appropriate code and description. For a list of codes, please refer to the Expense Code List or the commodity code list. If your item is not listed, please leave the code blank.

List all inputs you had on hand at the end of your 2006 fiscal period. This includes fall application of fertilizer and chemicals (if applicable) and prepaid purchases. If you choose to report purchased seed in this section, do not report the amount again on the Crop inventory.

End Year Amount

Indicate the dollar amount that you had on hand at the end of your 2006 fiscal period. Include any applicable 2006 fall applications and any prepaid purchases in 2006 that are designated for the 2007 fiscal year.

Example: Based on a December 31 fiscal year-end: In October of 2006, you purchased $45,000 worth of fertilizer. You applied half of this amount in the fall and carried the other half in inventory into the 2007 fiscal year. In this instance, you would report a total of $45,000 in the End of Year Amount.

Section 11 : Deferred Income and Receivables

All participants, except those who filed to the CRA on the accrual basis, must complete this part of the Statement A if it is relevant to your farming operation

Deferred income is income you have chosen to postpone receipt of to the following tax year. A receivable is income that is owed to you for goods delivered or services provided in one fiscal year, but is not paid to you until the following tax year. In order for deferred income or a receivable to be considered allowable for the CAIS program, it must be associated with income that is considered allowable for the CAIS program (e.g., a receivable for a commodity sale is allowable; a receivable for machinery rental is non-allowable). For further details on allowable and non-allowable items, refer to the CAIS Program Handbook.

Production (Crop) Insurance must be reported as a receivable if you have not received your full indemnity before your 2006 fiscal year end.

Canadian Wheat Board Payments

For CAIS purposes, Canadian Wheat Board (CWB) adjustment, interim, and final payments, or payments from any other pooled commodity, are not to be reported as receivables on this section of your Statement A unless you actually requested the payment be deferred by the CWB from one fiscal year into the next.

Fed Cattle Set-Aside

If you received or will receive a payment under the Fed Cattle Set-AsideProgram for cattle held over at your 2006 fiscal year end, you must report the portion of that income attributable to 2006 as a receivable for your 2006 fiscal year on this part of the form.

Example: With a December 31 fiscal year end, if the effective date of the set-aside was December 1, 2006, and the amount per head per day was $1.50 (as per auction price), the producer’s 2006 CAIS receivable would be 31 days x $1.50 = $46.50 per animal. The total amount of the receivable would be entered on this section of the form.

Feeder Calf Set-Aside

Payments from this program are considered income in the year they are received.

Prescribed Drought Region (PDR) and Canadian Food Inspection Agency (CFIA) Deferrals

If you deferred a PDR or CFIA payment out of your 2006 fiscal year, report the amount of the deferral. Use the codes from the “PDR Deferred/ CFIA Livestock Codes” chart on page 8.

Perishable Horticulture Crops

For a commodity that is considered a perishable horticulture crop for CAIS purposes (i.e., a horticulture crop that spoils or decays easily and that cannot be stored for periods longer than 10 months, such as potatoes, apples, carrots, etc.), adjustments are made on an accounts receivable basis and not on an inventory valuation basis. Record the total of actual sales of your 2006 program year crop that occurred in 2007 as an ending receivable, once your entire 2006 crop has been marketed and sold.

Your completed Statement A must be sent by the 2006 program deadline date. If you have not marketed your entire 2006 crop or received all of your income from your 2006 program year at the time of completing your Statement A, use code 4999, Perishables-Unreported Deferral to indicate this, leaving the ending receivable blank. When the ending receivable value is known, submit the information to the CAIS Administration. The CAIS Administration cannot process your application until you have provided this amount. However, a partial payment based on an estimate may be available by completing the Perishable commodities worksheet.

Perishable Commodities Worksheet

The Perishable commodities worksheet option is available to producers of perishable horticulture crops who apply for the 2006 CAIS program. This is not a mandatory worksheet. By submitting this worksheet to the CAIS Administration at the same time you submit your 2006 Statement A to the Winnipeg Tax Centre, you are able to apply for the 2006 program year before selling or otherwise disposing of your 2006 perishable commodity crop(s). Producers who market some or all of their commodities in a marketing pool and have final pool payments outstanding are not eligible to use this form as the amount of the outstanding pool payments cannot accurately be estimated.

For more information on the worksheet contact the CAIS Administration.

HOW TO COMPLETE THE COLUMNS:

Code and Description

Enter the appropriate code and description. For a list of codes, refer to the Commodity Code List. If your item is not listed, leave the code blank.

Ending Receivables and Income Deferred to 2007

Indicate the dollar value of the account receivable or deferred income item that is owed to you at the end of your 2006 fiscal period.

Section 12 : Accounts Payable

All participants, except for those who filed to the CRA on the accrual basis, must complete this part of Statement A if it is relevant to their farming operation. An accounts payable is an expense that you owe for goods and services received but have not paid for by the end of your fiscal year.

In order for an accounts payable to be considered allowable for the CAIS program, it must be associated with an expense that is considered allowable for the CAIS program (e.g., a payable for a livestock purchase is allowable; a payable for building a barn is non-allowable).

Include in this part:

• any expenses for inputs that were not paid for but were on hand in your inventory at the end of your 2006 fiscal year (they must also be reported appropriately in Purchased Inputs); and
• any expenses for feed or livestock that were unpaid but on hand in your inventory at the end of your 2006 fiscal year (they must also be reported appropriately on your Crop and/ or Livestock Inventory).

Do not include:

• the interest portion of an accounts payable;
• amounts owed for items purchased through loans, lines of credit, or credit cards that have already been reported as an expense to the CRA for tax purposes; and
• CWB advance payments.

HOW TO COMPLETE THE COLUMNS:

Code and Description

For each item you are listing, please enter the appropriate code and description. For a list of codes, please refer to the Expense Code List or Commodity Code List. If your item is not listed, please leave the code blank.

End of Year Amount

Indicate the dollar amount that you owed for the payable item at the end of your 2006 fiscal period.

OTHER CAIS PROGRAM INFORMATION

New CAIS Participants

If you have not already received the new participant package for the CAIS program, please contact the CAIS Administration.

Worksheets Available from the CAIS Administration:

The following worksheets can be requested by contacting the CAIS Administration, or can be downloaded from the CAIS Web site.

The Modified Accrual Accounting Option (MAAO): Due to the nature of cash accounting, income and expenses may be included in a producer’s margins which do not reflect the income earned in that year. This is common in cases where producers defer income and/or expenses from one year to the next, or when producers expand their operation and purchase large quantities of inventory.

The MAAO is an optional feature which allows producers to adjust all their reference years using the same method of adjusting income and expenses that is applied to the program year. This includes adjustments to reflect changes in inventory, purchased inputs, deferrals, accounts receivable, and accounts payable from the start of each reference year to the end of each reference year. MAAO applications that are submitted will only be applied by the CAIS Administration if it benefits the producer. However, once the MAAO is used, the modified accrual reference margins will continue to be used each year, regardless of whether it increases or decreases the producer’s payment.

The Perishable Commodity Worksheet: This is an optional worksheet available to producers of perishable horticulture crops which allows producers to apply for the 2006 program year before selling their 2006 perishable crop(s).

Accrual to Cash Worksheet: This worksheet is used to adjust the allowable income and expenses in your reference margins from the accrual method of accounting to the cash method of accounting when required. For more information, refer to the CAIS Program Handbook.

Cash to Accrual Worksheet: This worksheet is used to adjust the allowable income and expenses in your reference margins from the cash method of accounting to the accrual method of accounting when required. For more information, refer to the CAIS Program Handbook.

Productive Capacity Information Worksheet: A Productive Capacity Information Worksheet must be filled out by all new participants to the CAIS program. The information provided on this worksheet is used to adjust reference year production margins, where necessary, to determine and account for any structural change that may have occurred in the farming operation.

A separate Productive Capacity Information Worksheet is available for the following:

• BC Apple Growers
• BC Sweet Cherry Growers
• New Brunswick and Nova Scotia Low Bush Blueberry Growers
• BC, New Brunswick and Nova Scotia Cranberry Producers
• Greenhouse and Nursery Operations

Commodity List

Program Payment Lists

Inventory Code Lists

Inventory Code List A

Shaded areas show which provinces use the code when reporting inventories. Only provide FMVs in sections 7 and 8 of your application for the following commodities if you can demonstrate that:

• your method of marketing the commodity was substantially different than the general marketing practice reflected in the published price list;
  
  
• your commodity is substantially different than the commodity listed on the code list.

In either of these cases, you may use FMVs based on sales or purchases of the commodity in your name within 30 days either before or after your fiscal year-end. For your own FMVs to be accepted, attach copies of receipts and/or supporting documents that substantiate these FMVs to the CAIS Additional Information and Adjustment Request Form found in the middle of this guide and send to the CAIS Administration at the address listed on the form. The Administration reserves the right to determine whether submitted FMVs are reasonable for all of your inventory.

Inventory Code List B

Shaded areas show which provinces use the code when reporting inventories. You must provide a FMV for your commodity based on the estimated market prices at year end. Although it is not mandatory to provide documentation supporting your prices for these commodities, doing so will assist the Administration in the processing of your claim and will increase the likelihood of your price being accepted. Supporting documentation includes:

• Receipts from sales or purchases of the commodity;
  
  
• Commodity specific price information from appropriate commodity marketing agencies.

Supporting documentation must be attached to the CAIS Additional Information and Adjustment Request Form found in the middle of this guide and must be sent to the CAIS Administration at the address listed on the form. The documentation should be submitted to CAIS at the same time you submit your forms to the CRA to ensure that CAIS has the information when processing your CAIS application.

Productive Capacity List

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.

Date Modified: 2006-12-01		Important Notices
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