Finance Canada estimates that Canadian farmers benefit from more than $400 million a year in tax benefits under existing tax laws.
This is in addition to billions of dollars a year in direct spending on farm programs and services.
The numbers came in an annual accounting of “tax expenditures” recently tabled in Parliament to estimate how much tax revenue did not flow to Ottawa because of tax breaks built into the system.
The recent report on farming and fishing enterprises says that the lifetime capital gains exemption is the main tax saving: $385 million in capital gains tax averted in 2012.
Read Also
Survey says Canadians support canola producers over EV tariffs
The majority of Canadians are in favour of lowering tariffs on Chinese electric vehicles if it would help improve market access for Canadian canola according to new data from the Angus Reid Institute.
The farm lobby has been urging Ottawa for years to increase the value of the tax-exempt capital grain tax break to at least $1 million to reflect current farm values.
In 2007, the Conservative government increased the onetime capital gain exemption to $750,000 from $500,000.
The federal cost of the farm capital gains tax break could soar over the next decade as the exodus of older farmers from the business picks up pace.
The finance department says that the once-in-a-lifetime capital gain tax break is by far farmers’ largest tax break.
In 2012, the department said farmers also avoided $25 million in tax by putting money into their AgriInvest accounts that attract government-matching funds.
There was a $5 million benefit for Quebec farmers investing money in their parallel Agri-Québec plan.
However, the value of the farm tax benefit pales when compared to other taxpayer tax avoidance benefits.
The department estimates that $2.3 billion in taxes were reduced because of charitable donations and political contributions last year.
Tax-free contributions to retirement savings funds cost Ottawa almost $9.4 billion in reduced tax revenue.
For the broader business community, accelerated capital cost deductions were worth $4.6 billion in reduced taxation last year.
The agricultural share of tax revenues skipped because of tax breaks is relatively small potatoes, according to the Finance Canada report.
