Farmers will take hit from capital gains tax changes, Commons committee told

financialpost.com:

Farming organizations are joining the chorus of concern over the federal government’s capital gains tax changes, with one group warning a House of Commons committee Tuesday that family-owned farms will be negatively affected.

“This policy inadvertently targets farmers who produce food to meet domestic and global demand and, as small businesses that are family-run, they do not represent the wealthiest among us,” Wheat Growers Association president Günter Jochum told the house finance committee. “By making farming financially less attractive, the number of farms will continue to dwindle, leading to greater consolidation and fewer family-owned farms.”

The federal government’s capital gains tax changes were introduced in April’s budget and increase the inclusion rate from 50 per cent to 66.7 per cent for individuals with more than $250,000 in capital gains in a given year. Corporations will face the higher rate for all capital gains.

Jochum noted that most Canadian grain farms are structured as corporations and thus will be affected by the changes.

Last week, Finance Minister Chrystia Freeland tabled a separate motion to approve the changes, which passed with support from the NDP and the Bloc Québécois. The changes are set to take effect on June 25 and the government has projected they will bring in $19 billion in revenue over the next five years.

These changes have faced heavy criticism by professionals, including doctors and certain independent business owners, who frequently incorporate and use their businesses for retirement planning purposes.

The Canadian Medical Association and the Canadian Federation of Independent Businesses have repeatedly expressed concern over the impact the changes will have on their members’