Farm groups are praising MPs who voted in favour of a law aiming to amend tax laws and make it easier for producers to sell their operations to family members.
Bill C-208, introduced by Conservative MP Larry Maguire for the first time in September 2020, is off to the senate for review after receiving approval from 199 MPs. The 128 opposing votes almost entirely came from the Liberals.
During previously held parliamentary committee meetings for the proposed law, farm advocates had expressed support for the law.
“It essentially ensures that real family farm transfers can access the same capital gains treatment as businesses selling to an unrelated party, rather than treating the difference as a dividend that’s taxed at a higher rate and cannot access the lifetime capital gains exemption,” said Canadian Federation of Agriculture assistant executive director Scott Ross during a meeting in March.
Ross told MPs current wording in the Income Tax Act penalizes farmers from transferring their business to family members.
“As a result, when a retiring farmer sells their business to their children, they face the prospect of paying a lot more in taxes than if they were to sell to a stranger. This difference in treatment can amount to hundreds of thousands of dollars,” he said. “This amounts to reduced productivity, increased financial risk and lost opportunities at a time when the sector holds such immense growth potential.”
Agricultural Producers Association of Saskatchewan said it was “very pleased” to see the law passed by the House of Commons on May 13.
“The passing of this bill in the House is good news for producers in Saskatchewan and across the country,” said APAS president Todd Lewis in a statement. “For too long, it’s hasn’t made sense that it’s cheaper to sell your farm to a stranger than to your son or daughter.”
The law is now being reviewed by the Senate, one of the final steps to becoming law.
If an election is called before the law is passed and parliament dissolves, as some are expecting, it would need to be reintroduced and begin again at stage one.