Canadian Farmers Seek Fair Succession Tax Reform

Calls Grow to Modernize Rules Blocking Fair Family Farm Transfers in Canada

Family farmers across Canada are urging the federal government to update tax rules that they say no longer reflect the reality of modern farming families. Current laws under the Income Tax Act allow farmers to transfer their farms to their own children without immediate tax penalties.

However, these same rules do not apply to nieces or nephews, even when they are the ones who have spent many years caring for the farm, says 33seven, a Canadian advisory firm that specializes in succession.

Because these relatives do not qualify for tax-deferred transfers, many families face large capital gains taxes that can reach millions of dollars. These heavy costs often force younger family members to sell the land they have worked on for decades.

As a result, many Canadian family farms risk being lost, not because of lack of interest or effort, but due to outdated tax laws.

Canada’s farm population is aging, with the average farmer now 56 years old. Statistics also show that fewer than one in twelve farms has a successor younger than 40.

Without new rules that allow more family members to inherit farms fairly, experts warn that large corporations or foreign-owned companies may buy up huge areas of farmland. This could change the landscape of Canadian agriculture and reduce opportunities for local farming families.

Industry advocates explain that today’s families look different from past generations. In the past, farming families were large, and there were usually direct descendants who could take over the farm. Today, farmers may have fewer children, or their children may choose different careers. Instead, nieces and nephews often step in to help manage the farm, handling crops, livestock, and daily operations for many years.

Experts estimate that over $50 billion worth of farmland will change hands in the next decade. Updating Section 73(3) of the Income Tax Act would help protect family-run farms, preserve Canadian ownership of farmland, support rural economies, and strengthen national food security.

Supporters believe this change reflects Canadian values by giving committed heirs a fair chance to continue farming traditions that support communities across the country.