OTTAWA, ONTARIO (RFD-TV) — Canada’s new federal budget includes tax changes that could make it easier for farmers to transfer their operations to extended family members, while leaving agriculture out of another proposed business tax incentive.
Lyndsey Smith with RealAg Radio joined Market Day Report to break down the budget’s highlights and explain what the changes could mean for farm succession and the next generation of producers.
Canadian Budget Focuses on Investment
In her interview with RFD-TV, Smith described the budget as an investment-focused plan, with government savings largely being redirected toward other spending priorities.
She said Canadians looking for more help with affordability may be disappointed by what the budget offers.
“Like the U.S., Canada has an affordability problem as well,” Smith said. “What I think many Canadians were looking for in this budget was more support for the affordability side. We did not really get that or see that in this budget.”
Some Tax Changes Benefit Agriculture
One previously announced measure included in the budget is Canada’s productivity tax deduction. Smith said it allows businesses to immediately expense certain capital investments, including farm equipment such as tractors, combines and tillage implements.
She said the measure applies across industries and is intended to encourage investment.
The budget also addresses a tax issue involving farm succession. Previously, certain tax breaks were available when farm ownership transferred to immediate family members, such as a son or daughter. The expanded rules will allow a broader range of family members, including nieces and nephews, to qualify.
Smith said the change responds to concerns from advisers and industry representatives who argued that farm families needed more flexibility when planning ownership transitions.
The expanded eligibility is limited to family members, however, and does not extend to anyone simply working on or involved in the operation.
Agriculture Left Out of Growth Incentive
Smith said another part of the budget creates a Canada growth incentive, offering tax relief to businesses that sell a business and reinvest the proceeds into another Canadian business or capital investment.
However, she said the incentive does not apply to farming or forestry.
That means agriculture is included in some of the budget’s investment-related tax changes but excluded from this particular benefit.
Changes Could Help the Next Generation
Smith said the expanded farm succession rules are especially important as a large number of farms are expected to change hands over the next several years.
She said farm families need to consider the tax implications of a transition well before ownership changes so operations can remain viable.
“It’s not always the son or the daughter that’s going to take over,” Smith said.
She added that the change has received positive feedback from industry analysts because it gives families more options for keeping farms within the family.
“We want people to be able to continue farming,” Smith said.
