Capital gains changes threaten family farms, say industry leaders

After weeks of research and consultation with farm tax accountants, Grain Growers of Canada (GGC) says capital gains inclusion rate changes will increase taxes by 30 per cent on family-run grain farms.

Other industry leaders, such as the Canadian Cattle Association (CCA) and Canadian Cattle Youth Council (CCYC) are calling on the Government of Canada to pause implementation and thoroughly study the proposed changes to understand the impacts.

Kyle Larkin, Executive Director of GGC, says that this hike:

• targets farmers’ retirement plans,
• complicates intergenerational transfers, and
• threatens the long-term viability of family farms across the country.

“A 30 per cent increase in taxes on the family farm also dramatically increases the cost of farms, pricing out many families,” says Larkin. “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.”

On CBC’s Power and Politics, Kyle Larkin, Executive Director of GGC, says we need to protect
and preserve family farms. Instead, he argues, the proposed change supports the
acceleration of corporate farms. (Skip to 16:00 to watch the capital gains segment.)

GGC says Canada is already experiencing a decline in family-owned farms, with a 2 per cent decrease between 2016 and 2021, according to the most recent data from Statistics Canada. 

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

Brodie Haugan, Chair of Alberta Beef Producers, emphasizes the need for mechanisms that support family farm transfers to ensure their continued success.

“We’re at a turning point in the industry,” says Haugan. “In 1991 the average age of farmers in Canada was just over 47 years old. It’s been steadily increasing since then, and now sits around retirement age. To ensure the success of Canada’s family farms, we need mechanisms that support family farm transfers.”

Nathan Phinney, President of the CCA says the unintended consequences of these changes are higher than the government likely realizes.

“Our producers and accountants have not had enough time to properly assess the magnitude of implications these changes will have on the beef industry. We urge the government to press pause on this implementation and have discussions on the impacts with farmers more fully,” explains Phinney.

The increase is set to take effect on June 25, 2024.

Grain Growers of Canada (GGC) is encouraging farmers to send letters to their Members of Parliament through the Protect Family Farms campaign.

CCA is encouraging Canadian farmers of all ages and all parts of Canada to reach out to show how these proposed capital gains changes may affect the succession of their family farming operations. Farmers can share their stories by contacting advocacy@cattle.ca.