--- title: "Dairy Quota & Herd Accounting for BC Farms | EverStone" url: https://www.everstonecpa.com/blog/dairy-quota-accounting-bc description: "How milk quota (Class 14.1) and dairy herd are treated on the T2: CCA rates, inventory vs capital, and AgriStability for Fraser Valley farms. Read on." type: guide updated: 2026-10-04 summary: "Milk and egg quota is Class 14.1 property — quota acquired after 2016 is depreciated at 5% a year on a declining-balance basis (older quota runs a transitional 7% rate for tax years ending before 2027). A dairy herd is generally inventory rather than a depreciable asset, and special farm rules govern how its value flows through income. Barns and equipment fall into their own CCA classes." faq_count: 7 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) Dairy Quota and Herd Accounting on the T2 Farm accounting # Dairy quota and herd accounting on the T2: *a Fraser Valley farm guide* By EverStone CPA · Reviewed July 2026 · 8 min read Fraser Valley dairy and supply-managed farms have an unusual tax profile: quota that can outweigh the land, a herd treated as inventory, and risk-management programs on top. A generalist usually goes wrong on quota and herd. This guide shows how each sits on the T2. **Quick answer:** Milk and egg quota is Class 14.1 property — quota acquired after 2016 is depreciated at 5% a year on a declining-balance basis (older quota runs a transitional 7% rate for tax years ending before 2027). A dairy herd is generally inventory rather than a depreciable asset, and special farm rules govern how its value flows through income. Barns and equipment fall into their own CCA classes. Because quota is often the farm’s largest asset, getting its tax treatment right materially affects the return. Quota, herd and buildings are three different animals. ## Quota as Class 14.1 property Since January 1, 2017, milk and egg quotas are treated as **Class 14.1** property. That class replaced the older eligible capital property (ECP) system. In practical terms: - **Quota acquired after 2016** is added to Class 14.1 at a 100% inclusion rate and depreciated at **5% a year** on a declining-balance basis. - **Quota that was on the books before 2017** carries a **transitional 7% rate** for tax years ending before 2027, reflecting the old ECP treatment as it winds down. Quota is often the largest asset, so its class, inclusion rate and transitional rules shape the annual deduction and any sale. A sale can trigger [recapture](https://www.everstonecpa.com/glossary#recapture) and a capital gain, so plan quota transactions first. ## Herd: inventory vs capital treatment The herd is not equipment: **livestock is generally inventory**, not depreciable property. Special farm rules, including inventory adjustments that shift income between years, govern its value, and breeding stock or elections can change things. Choose a consistent herd method deliberately rather than accept a default. **Want a CPA to handle this for you?** Tell us about your business and get a fixed fee in writing within one business day. See [our published fees](https://www.everstonecpa.com/pricing), or [get a fixed quote](https://www.everstonecpa.com/book-online). [Get My Fixed Quote](https://www.everstonecpa.com/book-online) ## Equipment and building classes on farms Other assets use ordinary CCA classes: machinery in some, barns and buildings in others, each at its own declining rate. Newer purchases may have had accelerated first-year deductions. Lumping classes or misclassifying a big purchase is a common, avoidable error. ## AgriStability and AgriInvest, at a high level Most valley farms use **AgriStability** and **AgriInvest**. They are not tax provisions, but draw on reported income and margins, and benefits and contributions have their own inclusion rules. You do not manage tax *through* them, but the bookkeeping behind a clean T2 makes them work and defends a reviewed claim. ## Year-end timing for farm corporations Incorporated farms have year-end levers, and timing matters: quota transfers, equipment in service and year-end inventory values interact. The aim is real transactions landing in the right year without an avoidable spike, far easier with current books. ## Getting it right Dairy accounting is a niche few serve well in the valley. An [accountant in Chilliwack](https://www.everstonecpa.com/accountant-chilliwack) who knows quota, herd and the programs keeps your [corporate tax](https://www.everstonecpa.com/tax-services) accurate anywhere in [British Columbia](https://www.everstonecpa.com/accountant-british-columbia). Sources - [Canada Revenue Agency — Farming Income Guide, Chapter 5: Capital cost allowance (Class 14.1, quota)](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4408/rc4408-07.html) - [Canada Revenue Agency — Eligible capital expenditures (farmers and fishers)](https://www.canada.ca/en/revenue-agency/services/tax/businesses/farmers-fishers/eligible-capital-expenditures-farmers-fishers.html) General information for Canadian farm owners, current as of July 2026. Farm rules change; confirm yours. Not tax advice; please [speak with a CPA](https://www.everstonecpa.com/book-online) before acting. About this article **EverStone CPA** Prepared and reviewed by a CPA at EverStone CPA, serving businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online) ### Keep reading [Accountant in Chilliwack →](https://www.everstonecpa.com/accountant-chilliwack) [Corporate tax (T2) →](https://www.everstonecpa.com/tax-services) [BC small business accountant →](https://www.everstonecpa.com/accountant-british-columbia)[Dairy quota and herd accounting in Chilliwack, and what the return has to show →](https://www.everstonecpa.com/blog/chilliwack-dairy-quota-herd-accounting) Common questions ## Frequently asked questions about dairy Quota and Herd Accounting on the T2 **How is milk quota treated for tax?** Milk quota is Class 14.1. Quota acquired after 2016 enters at 100% and depreciates at 5% declining; pre-2017 quota has a transitional 7% rate for tax years ending before 2027. As the largest asset, it moves the T2. **Is my dairy herd inventory or a capital asset?** Usually inventory, not depreciable property. Farm inventory adjustments shape how herd value flows through income; breeding stock and elections can change that, so set the method deliberately. **What CCA class is milk or egg quota?** Class 14.1, which replaced eligible capital property (ECP) on January 1, 2017. Additions use a 5% declining rate; older quota may follow transitional rules. Barns and equipment have separate classes. **Do AgriStability and AgriInvest change my taxes?** Risk-management programs, not tax provisions, but they rely on reported farm income and need consistent accounting. Benefits and contributions have their own inclusion rules. Clean books run both. **What happens tax-wise when I buy or sell quota?** Both recapture and a [capital gain](https://www.everstonecpa.com/investment-income-and-capital-gains): proceeds above the class balance claw back deductions, and above cost create a gain. Plan large quota deals before closing. **Does the way I value herd inventory at year-end affect my tax?** Yes. Livestock is generally inventory, and farm adjustment rules can shift income between years. Choose a method and apply it consistently; inconsistency is hard to defend and can cause spikes. **How are farm buildings and machinery handled compared with quota?** Separately. Barns, machinery and quota each have their own classes and rates. Lumping them or misclassifying a big purchase is a frequent, avoidable farm-return error. ## Farm in the Fraser Valley? We understand quota, herd and the programs that sit on top. Book a free, no-obligation consult with a CPA who works with dairy and supply-managed operations. [Get My Fixed Quote](https://www.everstonecpa.com/book-online)[Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) ## Have a question about this? Ask free through [the quick-question form](https://www.everstonecpa.com/quick-question); a CPA replies within one business day. Need more? A 45-minute **Advice Call** is $225 plus GST, credited to your first invoice if you become a client within 60 days. Want us to take it on? [Send an enquiry](https://www.everstonecpa.com/book-online). 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