Government uses federal budget to raise lifetime capital gains exemption for farmers and lower small business tax
An increase in the lifetime capital gains exemption for farmers in last week’s federal budget has drawn praise from farm leaders.
Agriculture didn’t rate a mention in finance minister Joe Oliver’s April 21 speech, but the decision to raise the exemption from $813,600 to $1 million for farm owners met with widespread approval.
It will help alleviate the tax issues associated with farm transition.
Canadian Federation of Agriculture president Ron Bonnett said the move was encouraging.
“We had been asking for some technical improvements to assist with succession planning, some tax measures on how it’s treated,” he said.
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“They weren’t addressed. However, this might have the impact of helping encourage some succession work as well. You don’t get hit with big tax bills that have to be paid transferring from one generation to the other.”
That, along with a decrease in the small business tax to nine from 11 percent over the next four years, will help reduce the tax burden overall, said the Western Canadian Wheat Growers Association.
“These tax measures help facilitate the transfer of the family farm to the next generation and will encourage more young people to take up farming,” said president Levi Wood.
Reduced taxes allows farmers to make investments in their operations, he added.
The Canadian Cattlemen’s Association and Grain Growers of Canada also said farmers would benefit.
“This increase will save the average farm owner some $27,000 in tax on a property valued at that million dollar mark,” agriculture minister Gerry Ritz told a Saskatoon business audience last week.
Most of the spending announced for agriculture is directed at market development and trade.
The budget allocated $18.1 million over two years, beginning in 2016, to expand the Market Access Secretariat, and adds money for more agricultural trade commissioners. Another $12.1 million will be used to expand marketing programs for small, medium and non-profit agricultural businesses.
Ritz described the secretariat as his “SWAT team.”
“These are the guys if there is a problem or a new market to go in and assess, they’re the ones that do it,” he said.
“It allows us to put boots on the ground in embassies around the world in these new potential markets.”
CCA president Dave Solverson said the organization was instrumental in forming the secretariat in 2009 and it has proven its worth many times.
“The Market Access Secretariat has real clout in the international arena, and so carrying that influence over to the newly expanded areas is fantastic news for Canada’s beef producers,” he said.
Solverson said he was pleased to see plans to expand the trade commissioner service and the money for marketing.
Ritz said the marketing money allows the federal government to take industry representatives with it on trade missions. The next trip in June to China will include 100 industry groups, he said.
Rick Bergmann, chair of the Canadian Pork Council, added his voice to the chorus of support for expanded trade activity.
“We are very supportive of the Canadian government’s trade agenda and efforts to secure agriculture market access,” he said.
Meanwhile, the budget also addressed internal trade concerns such as meat products that can’t move between provinces because of different inspection systems.
Industry Canada intends to establish an internal trade promotion office.
Bonnett said the CFA board had just formed a committee to look at internal trade barriers and is encouraged by this decision.
“All of the premiers have come forward to say, ‘yes, we need to do this,’ but no one wants to be first,” Ritz said.
“We’ll give them a little help.”
Other measures highlighted by industry include an accelerated capital cost allowance for manufacturers and food processors at a 50 percent rate over the next 10 years.
Bonnett said food processing has taken quite a hit in the last few years, and investment in that sector must be stronger.
“I think that’s critical if we’re going to access some of these foreign markets,” he said.
“If we can get increased food processing, it develops that local market access for us, too.”
Most agricultural spending is set through the agricultural policy framework. The current agreement expires in 2018.
karen.briere@producer.com
