Tax proposals about fairness: minister

Our government is committed to Canada’s farmers and growing the agri-food sector.

In our last budget, we recognized the agri-food sector as one of the most important for Canada’s economy, setting an ambitious goal to increase agri-food exports to $75 billion by 2025.

We also allocated millions to agricultural research and more value-added processing and defended Canada’s agri-food sectors internationally by restoring canola access and strengthening trade with Europe. 

We want to see farm families succeed.

Now, much has been said about our proposed tax changes involving private corporations. I want to reassure Canada’s farm families that this isn’t about you.

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We are committed to the middle class, including hard-working middle-class small business owners, farmers and fishers. What we are trying to address is the fact that a select few are using incorporation solely to gain an unfair personal tax advantage.

Hard working small business owners, including family farmers, are not the focus of these changes.

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On income sprinkling, we will continue to support family farms where we know everyone pitches in. Using incorporation to shift income to family members who make no contribution to the business in order to gain a tax advantage is what we want to address.

Family farms where people do legitimate work will not be affected by our proposals. 

On passive investment, we understand that many farm businesses use these accounts to save funds for a rainy day or to purchase equipment or land. We will make sure these activities are not affected — period. 

For those who earn more than $150,000 and are using corporations to build unlimited, tax-sheltered personal savings accounts over and above RRSP and TFSA limits, we are proposing to change the rules in order to level the playing field. That is because some are creating accounts in the multi-millions, far beyond any Canadian’s RRSP limit.

That said, I know many Canadians have used these accounts to save for retirement, and did so legally, under the existing rules. That is why we will not go back in time to affect people’s nest eggs in any way, including investment income from those savings. Our proposals will apply only on a go forward basis.

Lastly, I’ve heard from farmers concerned that our proposals could negatively affect the transfer of farms to the next generation. Let me assure you that this is not our intent. 

We recognize the importance of maintaining family farms. In fact, in these consultations we are asking Canadians for their views on how to better accommodate family transfers.

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We do, however, propose to prevent the use of complex transactions designed to circumvent existing rules restricting the conversion of income (dividends) to capital gains. These are sophisticated transactions — it is not simply the transfer of family farms from one generation to the next.

We remain committed to supporting young farmers by maintaining the tax exemption on intergenerational transfers and the $1 million lifetime capital gains exemption.

In all of this, let me reiterate that this is a consultation period, and that we are in listening mode. If you think these proposals inadvertently affect middle class farm families, we want to hear from you.

As we look to next steps, we are committed to the principle of tax fairness for the middle class. By addressing a system that disproportionately benefits the wealthy, and asking them to pay their fair share, we are keeping taxes low for the middle class and small businesss and helping those who need it most.

I know you work hard. I know you pay your taxes and you follow the rules. And if you are a middle class family working hard to grow your business and leave something for the next generation, let me assure you that you are not the focus of our changes. I look forward to working with you on making sure we get them right. 

Bill Morneau is the federal finance minister.

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  • ed

    Farmers will not be the targets when interest rates some day rocket up to 8%, 12% or even higher than 20% on lines of credit like they did in the 80’s but that doesn’t really matter. If you want to see what that hurt is going to look like just get out your calculators and do a little figuring. It is not going to be pretty because those rates that are coming will drive land prices down to less than half of what it is now in litterly just a dozen or so months. Sell a bit at the high to at least limit your interest exposure. Commodities have never really been the driver here, land price escalation is. That is a classic treadmill and bubble and can pop later this afternoon or whenever……Brace for impact guys. Taxes is not going to be your biggest problem. The speed at which you are shedding them is.

    • Harold

      Ed, I think I can add to what you are saying if you will. I know a “feel good” no content political BS narrative when I read one. I noticed that in the sense of “fairness” (a nothing burger term) it could not be conceived that the “loop holes” could be opened up for all to enjoy. It is only fair if the government receives more cash than what they are currently collecting. Tax fairness can never be considered by this finance Minister to be a tax reduction. What does the Finance Minister fairness have to do with us other than a hand collecting more cash? Everybody would think that a tax reduction is fair. Oh yes; they care. Apparently we are all tax scam artists when we lawfully follow their incompetently written rules; BAD!! – Taxpayer – BAD!! Is there a dog in the room? Isn’t it interesting that with all of Mr. “feel goods” claims of Agriculture accomplishments that he cannot accomplish responsible spending? It is NOT the finance minister who creates the economy; WE DO – did he say he accomplished something by placing it on the market? He is careful He assures us in collecting tax in all “fairness”, but a drunken sailor in spending it. What is our “fair share” to a drunken sailor? Why don’t we ask that question; too revealing? Canadians do not want this clowns fairness, we want tax accountability and Tax justification which is nothing more than spending disclosure. Oh; he forgot the “not feel good” part. He had nothing to report because there is nothing under his watch to report; he is the finance minister isn’t he? Is he saving us some money so that his hand is not always extended to the public? Somewhere in the Office of the Finance Minister there must be a written “copy and paste” “feel good” no content political BS narrative that every Finance Minister uses; It would explain why we keep hearing that same old song; the one that nobody has ever been able to dance to. BAD! – Finance Minister – BAD!!

  • matt10023

    If there are issues with abuses of the system, deal with those. But the plan is simply part of the Liberal’s goals to raise taxes. They’ve already raised rates and now want to make sure more people are subject to the them, including farmers.

    So, while we’re on the topic of fairness, why is it so many liberal politicians get massive pensions, sometimes two or more, for a few lousy years in office? Oh… and it’s tax free. Sorry, but team Trudeau are willing to walk the talk themselves, this is all about creating class warfare to conceal the real goal – more money to the government so they can waste it on trips to the UN.

    Hypocrisy doesn’t begin to describe this.