Bill C-208’s effects on the farm

This bill will save farm families hundreds of thousands of dollars, a tax expert said

By Diego Flammini
Staff Writer
Farms.com

A piece of legislation passed in the Senate last week will help farm and fishing families pass operations down to the next generations.

Bill C-208 provides uniform tax treatment whether a farm or fishing operation is sold to a family member or third party.

Prior to the bill’s passage, if a farm sold to a family member, the difference between the sale price and original purchase price was considered a dividend. But if the operation was sold to a non-family member, the transaction was taxed at a lower rate and the seller could use his or her lifetime capital gains exemption.

But with the bill set to become law, what could it mean in terms of tangible savings for a farm family?

Bill C-208 could save families hundreds of thousands of dollars, said Kurt Oelschlagel, national agriculture tax leader at BDO Canada.

“Say I own shares of a family farm and I want to sell my shares to my children and say (the shares) are worth more than $1 million,” he told Farms.com. “If I can sell my shares and use my capital gain exemption, I save about $270,000 in tax. That’s with looking at the highest tax rate in Ontario.”

The bill has multiple provisions in it which can affect an intergenerational transfer.

One specific item farm families face is if multiple children are involved and not all of them wish to continue farming.

“Before the changes came into effect, there were some very strict and very expensive rules you had to follow,” Oelschlagel said. “The government is making it so families have a lot more flexibility around assets and how to divide them.”

Industry groups are pleased to see the federal government pass Bill C-208.

Around 97 per cent of Canadian farms are owned by families and this piece of legislation will help ensure that continues, said Erin Gowriluk, executive director of Grain Growers of Canada.

“Family farm is so fundamental to Canada and this bill comes down to equity and we don’t want any preferential treatment,” she said. “If everyone is on the same playing field it’s going to help make sure that a seventh- generation farm can be passed on to the eighth generation.