B.C. Farmers' food donation corporate income tax credit frequently asked questions

The following will help answer your questions about the B.C. farmers’ food donation tax credit.

What kinds of donations are eligible for the tax credit?

To be eligible for this tax credit, your donation must be a qualifying gift. A qualifying gift, among other requirements, must be an agricultural product, which includes meat products, eggs or dairy products, fish, seafood, fruits, vegetables, grains, pulses, herbs, honey, maple syrup, mushrooms, nuts or other produce that has been grown, raised or harvested on a farm in B.C.

For purposes of this credit, agricultural products only include items that may be legally sold, distributed or offered for sale at a place other than the premises of the producer as food or drink intended for human consumption.  

It is anticipated that agricultural products will exclude most live animals, processed foods, tobacco, alcohol and marijuana products.  Donations of these products are not eligible for this tax credit.

To what extent can I process the agricultural product I am donating?

An agricultural product can be processed no more than to the minimum extent necessary so that, in B.C., the item is permitted to be legally sold, distributed or offered for sale at a place other than the premises of the producer of the item as food or drink intended for human consumption. Processed products such as pies, sausages, beef jerky, pickles, and preserves are not intended to be eligible.

Why can't I receive a tax credit for products I make on my farm (e.g., apple pies made with apples from my farm)?

The farmers’ food donation tax credit is available to farmers, farmers’ spouses or common-law partners, or farming corporations for donations of certain agricultural products to eligible donees.

To qualify for the credit a donated agricultural product can only be processed to the minimum extent necessary so it’s permitted to be legally sold, distributed or offered for sale at a place other than the premises of the producer of the item as food or drink intended for human consumption in B.C. As a result, some items that are produced on a farm do not qualify for the credit.

What groups can I donate to if I want to get this tax credit for my donation?

Donations must be made to an eligible donee.

To be an eligible donee, an organization must be a registered charity that is engaged in the provision of food to persons in B.C. without charge. The organization must provide free food mainly to those in need or it must help operate a school meal program.

Do eligible donees (e.g., food banks) have to issue separate receipts for this credit and the charitable and other gift tax credit?

No, the donation receipt issued for the purposes of the charitable gift tax credit may also be used for this credit.

However, the description of the gift must provide sufficient detail to establish that the gift was an agricultural product.  If agricultural products and other products are recorded on the same receipt, the receipt must show the eligible amounts for each type of product on the receipt.  

The Canada Revenue Agency provides information for charities on requirements for issuing donation receipts.

What are eligible donees (e.g., food banks) required to do when issuing a tax receipt?

The eligible donees must follow the same requirements that they follow when issuing receipts for any charitable donation of goods. The receipt must include a detailed description of the goods donated so that farmers or farming corporations and tax administrators can determine whether all or some of the goods donated are agricultural products eligible for this tax credit.

A registered charity is required to maintain adequate books and records, including copies of official donation receipts.

I'm part of a group of farmers that donated agricultural products to an eligible donee. Can I claim the credit for my part of the donation?

To claim the credit, you must have received a receipt showing your portion of the agricultural products donated by the group.

To issue a receipt for a charitable donation, a charity must be able to identify the actual donor or donors; if a group donation is made without detailed donor information, the charity may not be able to issue separate receipts.

How do eligible donees determine what the donated agricultural products are worth?

Eligible donees must use the fair market value of the agricultural products donated. The fair market value is usually the highest dollar value you can get for that agricultural product in an open and unrestricted wholesale or retail market, as applicable, between a willing buyer and a willing seller who are acting independently of each other. The value should be based on the quantity and quality of the agricultural product and is to be determined in each particular case.

Canada Revenue Agency provides general guidelines on determining fair market value.

Generally, if the fair market value of the agricultural product is less than $1,000, a member of the registered charity, or another individual with sufficient knowledge of the donated agricultural product may determine its value.

The person who determines the fair market value of the item must be competent and qualified to evaluate the particular agricultural product being donated.

Are there resources available to assist with determining 'fair market value'?

The following links may assist eligible donees with determining fair market value for some agricultural products.

Note: these links are only meant to guide assessment. If an eligible donee needs to verify the value of a donated item, they may wish to seek the assistance of knowledgeable parties unrelated to the donor or the charity, such as other farmers, retail stores or wholesalers.

Statistics Canada provides average retail prices of selected produce on a monthly basis. Produce included are:

• Meat (round steak, sirloin steak, prime rib roast, blade roast, stewing beef, pork chops, chicken, bacon)
• Dairy and eggs (homogenized milk, partly skimmed milk, eggs)
• Fruits (apples)
• Vegetables (carrots, celery, mushrooms, onions, potatoes)

Canada Revenue Agency provides general guidelines on determining fair market value.