Latest news on proposed tax reform
- December 14:?Changes to income sprinkling rules are a step in the right direction for farmers
- December 13:?Government announces details on measures to restrict income sprinkling
- November 15: Read our recommendations to the Senate Finance Committee, which is studying tax reform
- October 20: News release: Rollback on proposed tax changes is good news for farm families
- October 16: Media Statement – CFA reacts to announcement of small business tax changes?
- October 2: Read CFA’s submission to Finance Canada’s consultation
- August 31: View CFA’s news release on the upcoming tax changes
The federal government announced on July 18, 2017, a series of transformative tax proposals that may have a severe negative impact on family farm corporations, particularly for multi-generational farms. As the most significant tax changes in recent years, these proposals will spell uncertainty for all family farm corporations.?CFA is working with federal officials, agricultural stakeholders and the broader business community to explore the options laid out by Finance Canada in ‘Tax Planning Using Private Corporations’ — as it is clear that?further study and technical analysis is required.
CFA recommended several changes to tax proposals
With the 75-day consultation period now complete, CFA focused on advocating for changes to the tax proposals as outlined in its submission to government. Read the submission to learn more. CFA was pleased that the federal government has decided not to pursue some of the original proposals. See our news release. We will keep members updated as the proposals are further refined.
The short consultation phase did not allow enough time for farmers to participate in a fulsome review and discussion around such transformative changes. In fact, the proposals are so dense and highly technical that even tax specialists felt rushed trying to parse through them, seeking to define the scope of their ramifications. Some changes are set to come into immediate effect, and some will lead to retroactive expenses, threatening major consequences for family farms in Canada.
Our advocacy campaign?
CFA staff are working hard to ensure farmers’ voices are heard on this matter, and many farmers have joined in this campaign! This requires a country-wide grassroots effort. Add your voice to our call for Finance Canada to ensure a comprehensive consultation before finalizing any tax changes.?Visit this link and enter your postal code to find your local MP’s contact info.
Tell your MP that these tax proposals require further study.
Include the following points in your letter or conversation.
- Family farms will be affected – The proposed changes will increase complexity and uncertainty to any farm business that has incorporated, which represents 25% of all farm businesses across Canada. Changes to the lifetime capital gains exemption, amongst others, create unprecedented complexity for those multigenerational farms looking to transfer to the next generation, while presenting considerable uncertainty without further guidance. The current proposals create disincentives to passing farms on to the next generation, threatening the future financial health of multigenerational farms across Canada.
- Farmers use tax planning tools, not loopholes – Recognize that tax planning mechanisms are being used as was intended, and do not represent the ‘loopholes’ that the proposal currently portrays.
- Small business owners are the middle class – Most small business owners are firmly in the middle class, and employ roughly 70% of those employed in the private sector. These independent business owners are unfairly labelled as taking advantage of ‘loopholes’ and cheating the tax system.
- Small business owners face unique risks and costs – Small business owners take on business and financial risks that are not faced by wage-earning employees – especially in agriculture. These risks, amongst the range of costs they must also bear, are not considered in this discussion on fairness, leaving business owners at a considerable disadvantage.
- Complexity, uncertainty and unintended consequences – The proposals are highly technical, with complex interactions throughout the Income Tax Act. Many tax practitioners who have had over a month to review these proposed changes are still parsing through them. Given the implementation dates of these proposals, this complexity and lack of understanding presents a significant risk to business owners that must make critical tax-related decisions in the coming months.
- Further study is needed – A 75-day consultation introduced the middle of summer on complex legislative proposals has not allowed for a fulsome review of such transformative change. CFA and other farm organizations are available to work with the federal government to look at whether there are changes needed to address these issues and to propose solutions.
Learn about about the potential impacts?
- MNP’s document“Potential Impacts of Changing Tax Regulations on Ranching Operations”.
- MNP’s article “How Proposed Tax Changes Could Impact You and Your Business” and download their fact sheet on the effects the proposed tax changes would have on farmers.
For more information, contact Scott Ross, CFA’s Director of Business Risk Management and Farm Policy, at 613-236-3633 ext. 2324.