Feds extend capital gains exemption for farmers

Wednesday, April 22, 2015

by JIM ALGIE

Farmers disposing of agricultural properties can qualify for an expanded, lifetime tax exemption on capital gains of up to $1 million as a result of Tuesday’s federal budget.

Finance Minister Joe Oliver announced the boosted exemption as part of a budget speech that included other tax relief measures for individuals and businesses. He also predicted a surplus on government operations in the current fiscal year, a year which includes an autumn election.

Opposition agriculture critic and other observers expressed reservations, however, about continued limits of farm spending in what has widely been described as an election budget. New Democratic Party agriculture critic Malcolm Allen said in an interview that Tuesday’s budget contained little of substance aside from the capital gains move. Ontario Federation of Agriculture President Don McCabe, reached by phone in Minneapolis, Minn., expressed cynicism about farm spending cuts in recent years that have helped “make a federal budget look good.”

He referred particularly to reductions in federal government spending on scientific research at Agriculture Canada and on business risk management programs for farmers. It hasn’t been an issue because of recent high commodity markets, the federation president said. However, this year’s return to lower market prices may require farm policy adjustments, McCabe said.

“We have to ensure we put in a safety net system that allows farmers to be sustainable in their own economics so we can take care of the rest of society’s needs while we’re at it,” he said. Reduced government support for the national Agri-Stability program has left policy gaps that need filling, McCabe said.

Agriculture Minister Gerry Ritz said in an interview that the budget continues his government’s emphasis on trade growth. The increased capital gains exemption is the third one under the existing Conservative administration and should help retiring farmers manage tax implications of recent, dramatic increases in farm land values, he said.

“When you look at the average age of farmers . . . there are a number that are talking (about) transferring it (the farm) . . . and they’re going to get caught with capital gains because they’ve gone up in value,” Ritz said. The move to a $1 million capital gains exemption saves about $27,000 in federal tax, he said.

Although the NDP’s Allen criticized “a light-weight budget for agriculture,” he welcomed the move on capital gains.  His party has called for such an increase only at a higher level.

Allen also underlined the potential of an enhanced capital gains exemption to be paired with support for newcomers to agriculture. He described the budget move as “a step in the right direction,” but added “I think there’s a way to marry those programs with succession planning.”

If Tuesday’s budget was electioneering, it underlines the track record of a government which has emphasized freeing markets and individuals over the collective needs of farmers, Allen said. He pointed to last week’s sale of a majority stake in the Canadian Wheat Board as a case in point.

The sale to a U.S. and Saudi merchant partnership occurred despite a higher-priced offer from the farmer-owned business alliance, Farmers of North America, Allen said. It shows the government was “hell bent on making sure the Canadian Wheat Board didn’t stay in any form of farm control at all,” he said.

“Everything for them is about free markets,” Allen said. “It’s about taking away farmer ownership out of anything that gets done,” he said.

Asked to summarize his government’s agriculture policy, Ritz emphasized growth in production and trade. “We’ve seen our trade numbers increase. We’ve seen our ability to grow and produce climb. We’ve put in place measures and we’ve taken some measures out that were restricting the ability of farmers to do what they do best,” Ritz said. BF