The Canadian Grain Commission has revoked the licenses of Zeghers Seed Inc, also known as Zeghers Canada. The company held a grain dealer license and a primary elevator license at Holland, Manitoba. According to the Canadian Grain Commission, farmers in all three Prairie Provinces may be owed money by this company for grain deliveries.
Any Canadian grain farmer owed money by Zeghers is urged to contact the Canadian Grain Commission immediately through their website or by calling 1-800-853-6705. When a licensed grain company fails to pay farmers, the Canadian Grain Commission uses the company’s security to make payment.
Farmers with deferred grain cheques more than a month old will be out of luck. Farmers have been regularly told about the dangers of deferred grain cheques. If a deferred grain cheque is more than a month old, it’s no longer covered by the Canadian Grain Commission’s bonding program.
In the Zeghers Canada situation, we still don’t know how many producers are owed money and how much was in deferred grain cheques, but when ILTA Grain went out of business several years ago, some producers were out of a lot of money because of deferred grain cheques. It’s long been a common practice to sell grain and ask for the cheque to be made out for the next fiscal year as a way to even out income and avoid higher tax brackets.
For incorporated farms, the small business limit is $500,000 in taxable income. On this amount, the combined Saskatchewan corporate tax rate is 11 per cent. For taxable income of $500,000 to $600,000, the tax rate is 15 per cent. After $600,000, the Saskatchewan corporate tax rate jumps to 28 per cent. This is an incentive to even out income and that’s why deferred cheques are sometimes used. However, accountants say other tools are available.
A rather new development is the use of optional inventory inclusions under Section 28 of the Income Tax Act. Using this tool can help avoid the risk of deferring grain tickets. While a grain company may seem financially sound, surprises happen.
To get protection for cases like Zeghers Canada and ILTA Grain through the Canadian Grain Commission, don’t have deferred grain tickets that are more than a month old.
