The Liberal government’s proposed tax rules could pose a barrier to intergenerational succession of farm businesses
Proposed tax modifications have the potential to significantly affect farming families.
The intended purpose of the proposed changes is to ensure wealthy Canadians do not pay less tax than the middle class, according to yesterday’s CBC report. But critics caution these changes could drive family farms out of the industry by making incorporated operations less competitive and increasing the cost of succession planning.
As a result, producers are lobbying the Canadian government to exempt farmland from the new rules.
“To penalize the next generation for wanting to carry on a family farm is absolutely wrong,” Andrew Pedden, an Alberta farmer, said to CBC.
The government has set an Oct. 2nd deadline for Canadians to voice their opinion on the changes. However, this timing could not be worse for producers, as many farmers are in the midst of harvest.
And producers are stressing that the government needs to take the time to methodically review potential changes.
“It’s important (for everyone involved) to … gain a clear understanding of what’s at stake. That includes looking at penalties for the many farmers who incorporate to access lower tax rates that allow them to re-invest in their operation. (Farmers) are also subject to more risk and lack benefits,” Lynn Jacobson, Alberta Federation of Agriculture president, said in CBC’s report.
The government is considering the proposed tax changes with farmers in mind and has made some allowances already, David Barnabe, Finance Canada spokesperson, said in an email to CBC.
“Farmers and other small business owners can continue to have family members actively involved in, and appropriately compensated by, the business,” said Barnabe.