On November 6, 2013, the Local Food Act, 2013 (Ontario) (“LFA”) received Royal Assent. The LFA is a statute enacted by the Legislative Assembly of Ontario to encourage local food economies in Ontario. Among other things, the LFA provides for a new non-refundable provincial tax credit for certain donations of agricultural produce by local farmers.
The LFA provides for three requirements that must be met in order to claim the tax credit:
- the donated product must be an agricultural product produced in Ontario and donated by an “eligible person”, which is defined as an individual (or spouse) or corporation that is engaged in the business of farming in Ontario;
- the agricultural product must be donated to an “eligible community food program”, which is defined as a person or entity that is a registered charity under the Income Tax Act that is engaged in the provision of food to the public without charge in Ontario; and
- the donation must be made on or after January 1, 2014.
Donations by eligible persons in Ontario are eligible to receive a tax credit or deduction (depending on whether the donor is an individual or corporation) in the amount of 25% of the fair market value of the donated food.
Charities in Ontario that operate food banks or other charitable food distribution programs in Ontario should take note of this new tax incentive, which is hoped to encourage more donations of food to local charities. Such organizations may wish to advise any eligible famers in their network so as to ensure that potential donors are aware of this opportunity.