Federal government will discuss ways to improve the intergenerational transfer of farm businesses
By Kaitlynn Anderson
Staff Reporter
Farms.com
Farmers who are planning to pass their operation down to their children can take a sigh of relief, as the government has heard the concerns over its proposed tax changes.
Last week, Finance Minister Bill Morneau announced that the federal government will not implement the proposed changes to the Lifetime Capital Gains Exemption (LCGE).
“Under the proposals that (the government) put forward, there were going to be restrictions on (the amount) of Lifetime Capital Gains (LCG) you could use when transferring to a corporate entity,” Ron Bonnett, President of the CFA, said in an interview with Farms.com.
“(These restrictions) could have had a huge impact on the amount of tax that would be payable on the transfer of a farm to a family member.”
This particular rule “would have made it more costly for small business owners — including farmers and fishers — to sell or transfer their business to their children,” Dan Kelly, President of the Canadian Federation of Independent Business, said in a release yesterday.
The proposed changes would have put an additional burden on the next generation taking over the farm, Bonnett said.
And, farmers had already invested their time and money into “tax and succession planning based on the rules as they stand today,” he said.
“The new proposals could have changed their entire plans.”
However, the recent debates have taken a positive turn.
The discussions around the proposed tax changes have sparked the government’s interest in further conversations on succession planning.
The government wants to see "if there are other ways that could improve the ability of farmers to pass the farm from one generation to the other,” Bonnett said.
This notice followed the federal government’s announcement on Oct. 23 that it will cut the small business tax rate from the current rate of 10.5 per cent to 10 per cent in 2018 and then to 9 per cent in 2019.
“The tax announcements have been fairly positive throughout the whole week,” Bonnett said.
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