Canadian agricultural groups draft letter asking for reversal of federal capital gains increase

A group of Canadian agricultural organizations signed a letter asking the federal government to reverse recent financial changes by the federal government.

The letter looked to bring up their concerns with respect to the proposed increase to the capital gains inclusion rate, the Alternative Minimum Tax, and the Canadian Entrepreneurs’ Incentive.

The letter did mention one sector of improvement, that being the Lifetime Capital Gains Exemption to $1.25 million, which they say helps address one of the sectors concerns that the LCGE threshold does not reflect the appreciation of farmland values and capital demands in agriculture over recent years.

Aside from that, the letter stated that the increase to the capital gains inclusion rate would more or less cancel out the gains exemption mentioned above, causing problems for intergenerational farm transfer in Canada.

In the letter, the groups propose several targeted measures that they recommend be taken into consideration by the Government of Canada.

1. That the effective implementation date of these measures be postponed until at least January 1st, 2025, to allow for more in depth consultation with affected parties.
2. That the CEI include not only first-generation farm businesses (i.e., the founding investor), but also be made available to successive generations of farm families.
3. that all Bill C-208 eligible intergenerational farm transfers in Canada continue to fall under the old one-half inclusion rate under the Income Tax Act.
4. that any capital gains eligible for the lifetime capital gains exemption be excluded from the calculation of the AMT, even if the exemption is not claimed (for example, if it has all been used).
5. To ensure tax neutrality, we strongly recommend that the CEI not discriminate against businesses employing (holding companies)

The letter says that the agricultural groups would be happy to talk further with the federal government on the issue.

The signatories of the letter included the following:

– Canadian Federation of Agriculture
– Canadian Canola Growers Association
– Grain Growers of Canada
– Canadian Cattle Association
– National Cattle Feeders Association
– Canadian Seed Growers Association
– Fruit and Vegetable Growers of Canada
– Canadian Hatching Egg Producers
– Canadian Ornamental Horticulture Alliance, and
– Canadian Sugar Beet Producers Association