Sure, I can respond to that.
There were some questions posed earlier I think when the minister was here as well, and they may have referred to the measure as a tax credit, which was not completely accurate. This particular measure relates obviously to farmers. It talks about situations in which a farmer is required to dispose of their breeding herd because of drought conditions in the past and, with the new measure, the excess moisture or flood conditions.
Many farmers operate using the cash method of accounting, which means they will deduct the cost of purchasing their inventory, including animals, and when they sell the animals they will include the whole proceeds in income. This differs from many other types of businesses that use accrual accounting, such that you would not deduct the cost of acquiring your income, and hence when you sold the property the cost of the property that you sold would be excluded from your income. It's the profit element that you would take into account. Using the cash method, it's different. When you buy the inventory the whole thing is a deduction; when you sell the property the whole thing is an income inclusion.
For those farmers who have to sell breeding cattle, part of their breeding herd, because of drought, or now because of excess moisture and flood conditions, they're selling at a time when even though they may not be making a profit on the sale because it's being made at a time when the market is distressed because of the drought or the flood conditions, they will have to include the whole proceeds of disposition into income.
The next year, if they are going to want to replenish their herd, they won't have the money because they will have paid the tax in the previous year. What this measure does is allow farmers to withhold or defer a portion of the tax on the sale of the breeding herd to the next year. At such time they will have the deduction from buying the new replacement cattle, and as such they continue going and they don't have a cashflow problem.
The tax law provides that for dispositions of breeding herds between zero and 15%, there's no deferral; between 15% and 30%, there's a deferral of 30% of the proceeds; and for dispositions of more than 30% of your breeding herd, there's a 90% deferral until the next year. If the next year also happens to be a drought or flood year, then it shifts to the year following, etc.