Two key ways to maximize your AgriInvest account

3.5 min read

With the change of the season from fall to winter, many farmers turn to our offices for refuge from the cold weather and spend time preparing our financial affairs for the year.

One good place to start is by reviewing your AgriInvest accounts to ensure the funds are being utilized properly. There is estimated to be more than $2 billion saved in AgriInvest accounts across Canada, so it’s likely worth your time to ensure your account can be accessed, and those funds are put to good use on the farm.

AgriInvest is part of the Business Risk Management program provided by a partnership between the federal and provincial governments. Each year, producers can file their Eligible Net Sales (ENS) on the prescribed form. Once assessed, producers deposit 1% of the ENS to a maximum of $1 million into an account at their financial institution. These funds will be matched by the government and deposited into the same account. Funds are designated as Producers Deposits and Government Matching Deposits and are all held in the same account at the financial institution.

Important deadlines

Sept. 30: The deadline to file the forms, regardless of your operations year-end, without a penalty.

Dec. 31: If you missed the Sept. 30 deadline, there is still time to file before the end of the calendar year. However, your matching deposit will be reduced by 5% per month or a partial month past the Sept. 30 deadline.

90 days from deposit notice: Once the forms have been filed and assessed, the administration will issue a deposit notice. This tells you the amount you can deposit and what you can expect to receive for matching funds from the government. You then have a strict 90 days from the notice being prepared to make this deposit and have the funds matched. There is NO extension to this deadline, so it is important to ensure the funds are deposited on time to benefit from the program.

Once you’ve met the deadlines, here are two key practices to maximizing your AgriInvest funds:

1. Count all the farmers in your operation

Since there is a limit of a matchable $10,000 amount each year, it means $1 million of ENS per farming unit will reach the maximum. If you have multiple farming units - that is, multiple farmers in the farm corporation - you can potentially have matching funds up to $10,000, provided your farming operation has enough ENS. For example, a young farmer starting with their parents’ operation will likely have sales from their operation and qualify for a matching deposit on their ENS; therefore, they should be filing their own AgriInvest forms.

2. Plan for taxes

The designated funds from the government, along with the interest earned on the account, will be taxable when withdrawn. Therefore, tax planning should be done before requesting a withdrawal.

With an estimated $2 billion in AgriInvest accounts across Canada, it’s a good idea to withdraw any funds you may have a use for and not use the program as a savings account.Also, remember that you can withdraw as little or as much as you would like in any given year. The first funds paid out of the account will be the taxable portion, with the funds designated as producer deposits second. When you can pay the taxes on the funds at the lowest rate in a lower-income year, withdrawing the funds and using them in your operation makes good tax sense. If there are debts that can be paid down or assist in an expansion, these funds can help reduce the interest costs that your farming operation would otherwise incur. Interest earned on these AgriInvest accounts will almost always be lower than the interest rate charged on a loan for your operation.

No triggers force you to withdraw funds from your AgriInvest account. With an estimated $2 billion in AgriInvest accounts across Canada, producers are clearly not regularly using the funds in their operations. It’s a good idea that if you need these funds, they be withdrawn and used for their intended purpose, and the program is not used as a savings account.

Article by: Lance Stockbrugger

Accounting & taxes