Posted on June, 21, 2024 at 09:13 am
Prairie farmers are being encouraged to let their thoughts be known on the impact the changes to the Capital Gains will have on their operations when it comes into effect June 25th.
The Grain Growers of Canada have set up a site "protectfamilyfarms.ca" for people to sign a petition and register to email their MP on the damage Ottawa's proposed changes will have on family farms.
The concern surrounds changes announced by the Federal Government in Budget 2024 proposing changes to the capital gains inclusion rate which will see it jump from 50 per cent to nearly 67 per cent in some instances.
Alberta Grains is calling on the government to allow all eligible intergenerational farm transfers to be taxed at the original capital gains inclusion rate.
"For individuals, the higher rate applies only to capital gains above $250,000, with the first $250,000 taxed at the original 50 per cent rate. Corporations and trusts, which encompass many family farms, will see all capital gains taxed at the increased rate. Despite an increase in the Lifetime Capital Gains Exemption (LCGE) to $1.25 million for qualifying farm operations, the higher inclusion rate effectively nullifies this benefit."
Shannon Sereda, Alberta Grains Director of Government Relations, Policy & Markets says farming is a capital-intensive business.
"Farmers make significant investments early in their careers and look to withdraw the equity from these investments upon retirement. The new inclusion rate adds significant barriers to both retirement and succession planning."
With over 40 per cent of Canadian farmers expected to retire in the next decade, Alberta Grains, alongside other farm groups, has long advocated for tax rules that facilitate these transitions. For instance, Bill C-208, introduced amendments in Budget 2023 to help ease provisions associated with intergenerational farm transfers, changes to the inclusion rate will hinder the intent of those amendments.
Tara Sawyer, Chair of Alberta Grains, is concerned about the impact.
"If Canada wants to maintain a thriving agricultural sector, it must exempt intergenerational farm transfers from this tax increase."
She says the changes are a barrier for young farmers carrying on the family business and for new farmers entering the industry. Alberta Grains remains committed to supporting family farms and advocating for policies that promote a sustainable and prosperous future for Albertan farmers."
Sawyer says the primary concern here is that it's targeting farmers retirement plans, but more so, it's the issue it creates for intergenerational succession planning and getting that next generation into the family farms.
"I would say this is going to seriously impact that, you know. So it's definitely of great concern when you think about the age demographic of most farmers in Canada are over the age of 55. So most farmers if they don't already have succession plans in place they're thinking on it. So going from 50 per cent to close to 67 per cent increase on that capital gain affects that. I mean, we're talking about we figure for most farms about a 30% tax increase that is not an insignificant number."
Like many other producers who have children or young adults that want to come back to the farm, Sawyer says the capital gains move is generating a lot of discussion and a lot of concern.
"When you talk about a government that said this budget was supposed to be fair, we're seeing it's exactly the opposite. It really feels like they're attacking the Canadian farmer and didn't think about us at all."
The proposed changes for the capital gains inclusion rate was announced in the federal budget in April and are expected to be implemented June 25th.
She points that if we want farming to continue to feed the world, and if everyone wants to continue to have family farms this puts farmers completely at risk.
"That's not being dramatic. That's the reality. It really does. It's a huge financial burden."
Alberta Grains is encouraging farmers, ranchers, land owners and the general public to get involved and speak up for the family farm by participating in the Grain Growers of Canada petition and email campaign at "protectfamilyfarms.ca".
Source: Central Alberta