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By Curtis Galbraith

Agriculture

Capital gains tax changes will mean 30 per cent tax increase for farms says GGC

Jun 12, 2024 | 6:00 AM

UPDATE June 25: Grain Growers of Canada issued the following statement after the increase to the capital gains tax inclusion rate came into effect.

Today (Tuesday, June 25), the Government of Canada increased the capital gains inclusion rate from one-half to two- thirds.

Research released by Grains Growers of Canada (GGC) has shown that this represents a 30% tax increase on family farms across the country.

“We are disappointed to see the government raise taxes on the succession planning of family-run grain farms today,” said Kyle Larkin, Executive Director of GGC. “This hike targets farmers’ retirement plans, increases costs for the next generation, and threatens the long-term viability of family farms. We are calling on the government to support family farms by allowing intergenerational transfers to be taxed at the original one-half capital gains inclusion rate.”

Grain Growers of Canada says the new Capital Gains Inclusion Rate the federal government is bringing in will raise taxes on farms by 30 per cent.

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The group says in a release; this conclusion is based on what it calls “weeks of research and consultation with farm tax accountants.”

Executive Director Kyle Larkin says in the same release that this will impact retirement plans, farm transfers, and threaten the long-term viability of farms.

“A 30 per cent increase in taxes on the family farm also dramatically increases the cost of farms, pricing out many families. This puts the family farm at risk, as the only ones that will be able to afford to pay millions of extra dollars will either be corporate farms or development companies.” -Larkin.

Grain Growers President and Valhalla producer Andre Harpe says this means uncertainly for farmers.

“With over 40 per cent of farmers nearing retirement over the next decade, this tax increase introduces substantial uncertainty into their retirement planning.”

“Despite Budget 2024’s title of ‘Fairness for Every Generation’, this change will actually burden the next generation of farmers, who are already grappling with costly transfers.”

Larkin adds GGC is hoping for an exemption.

“To protect family farms, we are asking the government to exempt intergenerational transfers and allow them to be taxed at the original capital gains inclusion rate. 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.”

Grain Growers adds there was a two per cent decrease between 2016 and 2021 in the number of family-owned farms.