Tax Hike Threatens Family-Run Grain Farms
By Jean-Paul McDonald
Farms.com
According to Grain Growers of Canada (GGC), family-run grain farms in Canada are facing a significant challenge.
After extensive research and consultation with farm tax accountants, GGC has revealed that changes to the capital gains inclusion rate will result in a 30% tax increase on these farms. This change is set to take effect on June 25.
Kyle Larkin, Executive Director of GGC, stated, “Our research shows that an average grain farm in Canada, most of which are family-owned and operated, will see a tax increase of 30% due to the two-thirds capital gains inclusion rate.”
He further explained that this increase targets farmers’ retirement plans, complicates intergenerational transfers, and threatens the long-term viability of family farms across the country.
GGC’s research indicates that an 800-acre farm purchased in 1996 in Ontario would incur nearly $1.2 million in additional taxes if sold today. Similarly, a 4,000-acre farm in Saskatchewan would face an increase of just over $900,000.
Andre Harpe, GGC Chair and a grain grower from Alberta, expressed concern about the impact of this tax increase on farmers nearing retirement. He said, “With over 40% of farmers nearing retirement over the next decade, this tax increase introduces substantial uncertainty into their retirement planning.”
Larkin also highlighted the potential impact of this tax increase on the cost of farms, stating, “A 30% increase in taxes on the family farm also dramatically increases the cost of farms, pricing out many families.”
He warned that this could put the family farm at risk, as only corporate farms or development companies would be able to afford the increased costs.
To protect family farms, GGC is asking the government to exempt intergenerational transfers from this tax increase.
Larkin said, “This will ensure that farmers’ retirement plans remain secure, and that the next generation can afford to take over, enabling family farms to continue being the backbone of Canada’s agriculture sector.”