The Canadian Federation of Agriculture (CFA), among other concerned organizations and business owners, have successfully lobbied the Federal government to reconsider tax reforms which would have a negative impact on the farming industry.
In 2017, Finance Canada tabled proposals for tax reforms intended to reduce the ability of high-income individuals to shelter their income through treatment of capital gains and sharing income among family members.
“What seemed to show up in the analysis we did, there would be a huge long-term impact on the income that would be able to be used to finance capital expansion as well as insure that people retiring from their farm work have an adequate income to live on,” says CFA President Ron Bonnett. “I think sometimes people have a tendency to think small farms wouldn’t be impacted, but in many cases even smaller farms are looking at corporate structures and farm transfers and all those other issues—it could have an impact on them as well.”
The Canadian Federation of Agriculture (CFA), among other concerned organizations and business owners, have successfully lobbied the Federal government to reconsider tax reforms which would have a negative impact on the farming industry.
Bonnett says that the vast majority of farms in Canada are family-owned. And while some professionals were using corporate structures to avoid taxes, famers and other small business owners would be ensnared by the same efforts. In particular, the proposed changes would have had a huge impact on small and medium-sized business and their ability to earmark income for future capital purchases and the transfer of farms from one generation to the next. Bonnett says Finance Canada have addressed 80-90% of their concerns and they are waiting on the wording for the remainder.
“When there are changes in tax lobbying proposed, it’s not something that can be done in the short term because this is long-term stuff,” says Bonnett. “We have farmers that have spent months and sometimes years meeting with accountants and lawyers, figuring out, ‘okay, what’s the best way to transfer these farms from one generation to another, to get that balance so that young people have a farm that’s affordable to operate, and also making sure that the generation that’s retiring has enough set aside so they can have a decent standard of living.’ Any tax proposals that affect that long-term planning really have to go through a fairly extensive process where they talk to farm groups and accountants to find out what these changes are going to do.”
- Matt Jones