Key Highlights:
- Provincial Ministers from Saskatchewan, Alberta, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Manitoba voiced concerns over proposed capital gains tax changes.
- The changes, introduced in the 2024 federal budget, could negatively impact succession planning for family farms.
- Ministers argue that these changes will burden farmers, potentially jeopardizing the long-term viability of the agricultural sector.
- The Ministers are urging the federal government to reconsider the proposed tax changes.
Concerns Raised Over Capital Gains Tax Changes
At the recent Federal, Provincial, Territorial (FPT) Ministers of Agriculture conference in Whitehorse, Yukon, several provincial agriculture ministers expressed significant concerns regarding the proposed changes to the capital gains tax included in the 2024 federal budget. These changes, they argued, could have serious implications for the agricultural sector, particularly in the context of farm succession planning.
Impact on Farm Succession Planning
The proposed changes to the capital gains tax were not on the official agenda of the FPT Ministers of Agriculture meeting but were brought up during roundtable discussions. Provincial ministers highlighted that increasing the inclusion rate for individual capital gains above $250,000, and for corporations, from one-half to two-thirds, would disproportionately affect farmers. This adjustment, they argued, would penalize farmers who rely on selling their assets as part of their retirement plans and complicate the process of transferring farms to the next generation.
Saskatchewan’s Minister of Agriculture, David Marit, emphasized the critical role of agriculture in the economy, stating, “We must work with our producers to ensure their success, and the proposed changes to capital gains taxes will make it harder for us to do just that.” Alberta’s Minister of Agriculture and Irrigation, RJ Sigurdson, echoed these sentiments, warning that the changes could “unfairly burden our farmers and ranchers, who are already facing significant challenges.”
Broader Implications for the Agricultural Sector
Ministers from several provinces also expressed concerns about the broader implications of the proposed tax changes. They argued that the adjustments could threaten the long-term viability of family farms and, by extension, Canadian food security. With a significant portion of farm operators expected to retire by 2030, as noted in a recent Royal Bank of Canada study, the importance of facilitating smooth intergenerational transfers is becoming increasingly apparent.
Ontario’s Minister of Agriculture, Food and Agribusiness, Rob Flack, criticized the timing of the proposed changes, stating, “Raising capital gains taxes at a time when so many farmers are approaching retirement and managing farm succession planning is a serious mistake.”
Calls for Reconsideration
Ministers from New Brunswick, Prince Edward Island, Nova Scotia, and Manitoba also voiced their concerns, urging the federal government to reconsider the proposed changes. They highlighted the importance of supporting young farmers and ensuring that the agricultural sector remains robust and attractive for future generations.
New Brunswick’s Agriculture Minister, Margaret Johnson, noted the importance of policies that encourage young people to enter the farming sector, especially given the aging agricultural workforce. Similarly, PEI’s Minister of Agriculture, Bloyce Thompson, stressed the need to invest in the agricultural industry rather than imposing additional burdens through increased taxation.
Appeal to the Federal Government
In response to these concerns, the provincial ministers are urging the federal government to prioritize agriculture in its policy discussions and to reverse the proposed changes to the capital gains tax. They argue that without a thorough assessment of the potential impacts on the agricultural sector, the changes could have unintended consequences that may outweigh any anticipated benefits.
The ministers collectively called on the federal minister to advocate for the agricultural sector within the federal Cabinet and to ensure that policies support, rather than hinder, the continued success and sustainability of Canadian farming.
