The Saskatchewan Association of Rural Municipalities (SARM) is raising concern over recent policy changes made by the federal government.
Many agricultural operations in Saskatchewan are incorporated to help with succession planning and transferring assets from one generation to another to provide the retiring generation with a retirement income while helping the next generation continue the family-owned operations. Succession plans may be hindered by the introduction of new tax policy changes, SARM explains in a press release.
Farming operations have taken years, if not decades, to establish and contribute to the overall economy of the province, which in turn contributes to Canada’s food security and international trade markets, the organization states.
The Income Tax Act is a major factor in succession planning. The rules set out by the Canada Revenue Agency governing taxes on farm property sales are complex. Not all capital gains are taxable, and not all capital losses are deductible, or if one qualifies for a Lifetime Capital Gains Exemption. Capital gains realized upon the sale of farm-owned assets may be offset by the capital gains exemption, but this exemption may not be enough to help.
Farmers are not the only businesses facing challenges due to the new policy changes, SARM says.
Doctors, among others, will also be impacted by the changes. Many physicians are incorporated, which means the proposed inclusion rate will apply to every dollar of capital gains made by their businesses.
The proposed policy changes will harm Canada’s climate for investment and growth, SARM asserts. SARM is advocating that capital gains inclusion rates return to pre-June 25, 2024, rates to help ensure rural Saskatchewan remains strong and continues to contribute on a national and global level.
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