by SUSAN MANN
A small number of provincial farmers have government program benefit overpayments of more than $100,000 each and they plus others in the same boat but with smaller amounts will have to pay it all back within three years, according to Agricorp’s new rules.
Repaying the benefit overpayments within three years is one of two changes Agricorp is introducing to the way it handles these accounts. The other change is interest will be applied to any accounts with overpayments as of Jan. 1, 2013. Previously the Ontario government waived the interest owing on any overpayments. The interest rate will be determined quarterly by the Ontario government.
In total, 4,500 farmers have overpayment accounts totaling $30 million. That’s less than one per cent of the $3.5 billion Ontario farmers have received from the federal and provincial governments during the past 10 years, it says on Agricorp’s website.
Agricorp spokesperson Stephanie Charest says 75 per cent of the accounts with overpayments are less than $5,000 each.
In the past, farmers could repay their overpayment from future program payments and they can still do that now as long as the entire balance is eliminated within three years. They can also repay the entire amount at any time or repay any overpayment in installments. If farmers repay the full amount by Dec. 31 interest charges won’t apply.
The overpayments occurred because of incomplete program applications, processing errors, changes to farm operations and the nature of programs that provide advance payments for producers in financial distress, Agricorp says.
Mark Wales, Ontario Federation of Agriculture president, says the overpayments are from a number of programs and go back as far as the CAIS (Canadian Agricultural Income Stabilization) and the BSE programs. The CAIS program was launched in 2003 and was designed to provide funding for Canadian farmers to cushion extreme income reductions beyond their control. It was replaced by AgriStability when the five-year national Growing Forward set of programs was implemented in 2008.
Farm leaders were updated on the situation at the Agricultural Commodity Council meeting in April, he says.
“The outstanding balances have always been there,” Wales notes. “Farmers have known about them and many people have been working slowly to pay them down.”
Why is the government now pressing to collect this money? On its website, Agricorp says in the current fiscal environment the provincial government announced it’s focusing on eliminating the deficit while protecting vital services, such as health and education. “To support that effort, the government is working to recover all outstanding monies owed to the Crown.”
As for the interest charges, Agricorp says it’s normal practice to apply interest charges on debts owing to the Crown. In April’s provincial budget, the government announced it will only waive interest charges until the end of this year and interest would be applied starting in 2013.
Wales says Ontario is one of the only provinces that hasn’t charged interest on the overpayments.
As for whether this will cause some farmers hardship, Wales says the government really wants to work with people to design a repayment program that works. “When there was no interest being charged, no one got stressed out about paying them back.”
Jason Bent, Ontario federation manager of the farm policy research group, says they’ve been getting calls from concerned farmers who see this as a “recent reassessment.” But Bent says it’s not – it’s just the repayment terms that are changing.
Agricorp has been contacting customers for about a month and that will continue for several more weeks. All customers with overpayments are getting an information package with a detailed statement outlining their balance as of Dec. 31, 2011 that will explain what is owed, along with when and how the debt was incurred plus a repayment form.
Charest says “the statement will ensure producers understand what is owed.”
Deciding to not pay is not an option, Agricorp says. If a farmer doesn’t set up a repayment plan the account may be subject to the same collection processes as anyone else who owns money to the government. Even people who are no longer farming or farmers who aren’t participating in business risk management programs administered by Agricorp must repay any overpayments within three years.
Similarly, there isn’t a statute of limitations. All debts must be repaid regardless of when they were incurred, Agricorp says, noting it can only negotiate the terms of repayment within the three-year timeframe and not the total amount owing. BF
Comments
This nonsense/comedy of errors all started when, in the dying days of 2004, mainly livestock farmers received, with no explanation, an "advance" on the provincial portion of their 2004 CAIS payment. This payment made no sense, especially since there was no provincial election on the horizon, and it also made no sense since it was a payment nobody had applied for. A number of farmers who received this "advance" in 2004 never did qualify for CAIS and/or AgriStability, either in 2004, or any time since, thereby leaving this advance stranded, and this was especially the situation for those farmers who sold the farm and retired (or even died) between 2004 and now. Furthermore, I believe a good part of the reason Ontario implemented RMP for livestock producers last year, wasn't so much to give out new money, but to claw-back this stranded money while, at the same time, heap abuse on the feds for not participating in RMP. Of all of my clients who had money clawed back by RMP last year and/or who are now getting letters demanding repayment of some sort, type, or kind, I've never yet seen a letter, at any stage of the process until now, advising them that they'd been overpaid. I'm waiting to see what AgriCorp will do about those people who received an advance, let's say in 2004, and who died in 2006, and had their estates settled, and closed, in 2008, and now have AgriCorp come along and demand money. If the courts determine that AgriCorp had not given either adequate, or timely, information/notice about this debt to the affected farmers, then AgriCorp may never get it back - and that would really look good on them.
Stephen Thompson, Clinton ON
Thank god for Mr Thompsons memory, he has tried for years on these issues.
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Seems to me back in 2004 livestock farmers and their representative groups were requesting some sort of compensation or action for a surplus in meat production causing low meat prices. Agricorp was simply delivering the political decision of that day. As you indicate it was marked as an advance. All accountants should have listed it in his clients books as an advance on CAIS to be reconciled in the future.
When filing taxes on the cash system, income is recorded when received, and, therefore, this payment would have been recorded as income when it was received - especially since a T1Agr form was issued by government. The only issue at the time was that some people received it in 2004, and some received it in early 2005, and, therefore, it could be recorded as income in either year. However, if tax filing on the accrual system, and almost nobody does, this advance wouldn't be recorded as income, but as a loan - but it would still have been kind of retarded to do so, especially since, if I recall correctly, the T1Agr form would lead anybody to believe it was income, not a loan. Therefore, any accountant filing his/her client's return on a cash basis, SHOULD NOT "have listed it in his clients books as an advance on CAIS". As an example, I had a client who got some of this money in late 2004, and never heard another word from AgriCorp until 2011 when some of his livestock RMP money got clawed back because of this CAIS payment in 2004. Finally, the entire accounting issue is moot, because if AgriCorp hadn't screwed up in the first place, and had taken the time, and effort, to actually tell farmers they'd been overpaid, instead of surprising them almost a decade later, there wouldn't be as much ridicule to quite-properly heap on Agricorp as there is.
Stephen Thompson, Clinton, ON
"Heaping abuse" on Agricorp is a tad shortsighted in this case because the ultimate responsibility is with the politicians and or policy people at OMAFRA who set the "details" of the policy and decided that an advance on CAIS was the way to go. Agricorp simply delivers the set details of the politicians and policy people.Most accountants should have been aware that an advance on CAIS for the year it was annouced for had to be adjusted to the actual application.
I'll grant you that Agricorp is merely the messenger, and that others are to blame. However, from the accounting side of things, it would be completely unreasonable to expect any accountant to "adjust" this CAIS payment to the "actual application" because, for the most part, since this income was "earned" in a previous fiscal period to when it was received, it would mean re-opening the books for a previous fiscal year, and filing an amended tax return, and that would be just-plain stupid. Also by your logic, returning an overpayment in 2012 would mean re-opening a farmer's income statement for 2004 (or even 2003), and filing an amended return for that year - yet the time period for filing an amendment for those years is long-since past. Therefore, "adjusting' this income, either when received, or when repaid, is not only complete botheration, but also because it isn't "earned" income, its relevance to any year's operating earnings income statements, is zero. Let's put it this way - making adjustments of any sort is usually a bad thing, simply because since there's no good way of knowing the outcome, it's better to track bank records for income statements instead of any sort of convoluted and/or quasi-accrual meanderings.
Stephen Thompson, Clinton ON
Where do you sign-up for money? I,ve yet to receive money from any goverment for farming ,it must be a select few that gets it. Beside that some even get an added bonus, only in Canada they say.
I received a knee replacement from OHIP in 2011. Any danger of OHIP wanting it back 5 years down the road?
I understand agricorp can seize my bank account, my OAS, my farm, my car and so on.
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