An eligible person that donates agricultural products to eligible community food programs in Ontario, including food banks, may be able to claim a tax credit, in addition to the charitable donation tax credit.
The Local Food Act, 2013 introduced a new non-refundable income tax credit for farmers who donate agricultural products to eligible community food programs in Ontario, including food banks. The credit is worth 25 per cent of the fair market value of the agricultural products donated and can be claimed for donations made on or after January 1, 2014.
A qualifying donation is:
- a donation of one or more agricultural products produced in Ontario
- made to an eligible community food program in Ontario on or after January 1, 2014 by an eligible person.
An eligible person means:
- an individual (or his or her spouse or common-law partner), or sole proprietorship, who carries on the business of farming and resides in Ontario on December 31 of the tax year, or
- a corporation that carries on the business of farming in Ontario.
A trust is not entitled to claim this tax credit.
An agricultural product means:
- meat or meat by products, eggs or dairy products, fish, fruits, vegetables, grains, pulses, herbs, honey, maple syrup, mushrooms, nuts, or anything else that is grown, raised or harvested on a farm, and that may be legally sold, distributed or offered for sale at a place other than the premises of its producer as food, and
- any of the items listed above that was processed, if it was processed no more than to the extent necessary for the product to be legally sold at a place other than the premises of the producer.
An agricultural product also includes live animals suited for and intended to be processed as food.
An eligible community food program is a person or entity:
- that is engaged in the distribution of food to the public without charge in Ontario, including as a food bank, and
- that is registered as a charity under the Income Tax Act (Canada).
An eligible community food program must also be a person or entity:
- whose primary purpose for distributing food to the public without charge in Ontario is to provide relief to the poor, or
- that oversees or operates one or more student nutrition programs that provide meals or snacks to students enrolled in an elementary or secondary school or an alternative learning program.
Calculating the tax credit
For individuals or sole proprietorships, the amount of the tax credit depends on how much you give and is calculated as:
- 25 per cent of the value of the qualifying donations. You must also claim the qualifying donations under the charitable donations tax credit in the same year.
For corporations, the tax credit is equal to 25 per cent of the corporation's qualifying donations for the tax years ending after December 31, 2013, that the corporation claimed on Schedule 2, Charitable Donations and Gifts.
How do I get the credit?
If you are an individual or a sole proprietor:
Claim the credit by filing a completed Form ON428, Ontario Tax, with your personal income tax and benefit return (T1 return).
If you file your return electronically, you need to keep all your receipts and documents for six years. If you file a paper return, attach all official receipts for your qualifying donations to your paper return.
If you are a corporation:
Claim the credit by filing a completed Schedule 2, Charitable Donations and Gifts, with your corporation income tax return (T2 return).
Note: It is important to file your return as a completed package. Incomplete returns generate delays in processing.
Receipts do not have to be attached to your corporate income tax return. Keep all official receipts in case you are asked for them later during an audit.