A Summary of the CAIS Program

• The Canadian Agricultural Income Stabilization program helps Canadian farmers protect farming income from the risks of weather, disease, and low market price

Who can participate

• You must have farmed for at least six straight months during the program year and reported your farming income (or loss) to Canada Revenue Agency for tax purposes; and
• Complete (or attempted to complete) a production cycle during the program year
• The CAIS is available to individual farmers, farming corporations, farming trusts, farming co-operatives, and special individuals

How it works

• Producers select a protection level for their farming income - lower levels of protection have lower fees, higher levels of protection have higher fees
• Fees are calculated based on a reference margin - $4.50 per $1,000 of reference margin, plus an administration fee of $55
• All fees are non-refundable
• Reference margin - your average production margin for three of the past five years (CAIS drops the years in which your production margin is lowest and highest)
• Production margin - your allowable income less your allowable expenses in a given year
• If your production margin falls below your calculated reference margin in a given year, you will receive program payments based on the level of protection selected
• The greater the decline of production margin below the reference margin, the larger the government contribution payment

Minimum protection - guarantees any losses up to a 40% decline would be fully recovered. In the event of a production margin decline to 0%, the farmer would be returned to 70% of the reference margin.

Maximum protection - a farmer is covered for losses up to a 100% decline of his reference margin:

• Production margin will take expenses directly related to the production of a commodity (fuel, fertilizer, pesticides, etc.) and deduct them from eligible revenues
• The point of the production margin calculation is that the program is then responsive to risks of rising input costs and low market prices

Negative margins - Negative margins are protected under the CAIS program. A negative margin occurs when allowable expenses are greater than allowable income for a program year. If your program year margin is negative, you may be compensated for up to 60% of any portion of your margin that is below zero.

Why participate

• Production insurance offers only protection for production losses related to specific crops or commodities caused by hail, drought, flooding, disease and other factors
• CAIS provides protection for overall income losses not covered by production insurance, including those related to increased expenses or sudden price declines
• By participating in both programs, you are better protected against both production and income losses
• The programs are designed to work together so that producers are not disadvantaged by participating in both

Deadlines

• November 30, 2007 - deadline to sign up for CAIS 2007 and pay 2007 fees
• December 31, 2007 - final deadline to submit CAIS 2006 Harmonized forms with penalty
• March 31, 2008 - 2007 CAIS interim payment application deadline

If you have any questions about this or any other tax issue, please contact us.

Government of Canada's CAIS website