Canadian agri-businesses urge halt to capital gains rate increase

Oct 17, 2024
By Jean-Paul McDonald
Assistant Editor, North American Content, Farms.com

Call to halt capital gains rate increase in Canada

The Canadian Federation of Independent Business (CFIB), alongside 20 other industry organizations, has called on Minister of Finance Chrystia Freeland to halt the proposed increase to the capital gains inclusion rate and to extend the Canadian Entrepreneurs' Incentive (CEI) to all business sectors.

Among those supporting this request are key industry and agricultural associations, including, Grain Growers of Canada, Canadian Federation of Agriculture, Farm Fresh Ontario, and the Manitoba Pork Council.

Regarding the Lifetime Capital Gains Exemption (LCGE), the organizations welcome the recent announcements to increase and index it for the future, urging that these measures be retained and protected.

For the Canadian Entrepreneurs Incentive (CEI) to effectively encourage investment and entrepreneurship throughout Canada, it should not impose exclusions based on sector.

The CFIB argues that there is no valid public policy reason to deny the benefits of this tax incentive to business sectors like agriculture, restaurants, or medical practices while extending it to retailers and construction firms.

They call for the government to simplify the CEI and broaden its eligibility criteria to ensure equity, transparency, and simplicity.

The proposed increase in the inclusion rate to 66.7% is seen as detrimental to Canadian small and medium-sized enterprise (SME) owners who rely on investments within their corporations for future reinvestment, such as purchasing new equipment, expanding operations, or cushioning against economic downturns and retirement.

The CFIB contends that this change will make it more challenging for many businesses to secure financing needed for growth or to navigate difficult economic times.

The claim that raising the inclusion rate will primarily affect the wealthiest Canadians is viewed as misleading. Many business owners, their employees, and customers will also bear the impact.

To genuinely support Canada’s middle and aspiring middle classes—ranging from plumbers and physicians to farmers and chocolatiers—the government should heed these recommendations.

Photo Credit: Pexels N.Voitkevich

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