The Ontario Federation of Agriculture (OFA) is actively addressing concerns from Ontario farmers and farm businesses regarding the federal government’s proposed increase to Canada’s capital gains inclusion rate, which was announced recently in the 2024 budget.
What are the proposed changes?
For corporations and trusts: the inclusion rate will increase from one-half to two-thirds for all capital gains.
For individuals: The inclusion rate will increase to two-thirds for capital gains higher than $250,000 after deductions and exemptions.
These measures are proposed to take effect on June 25, 2024.
The budget also contained a proposal to increase the inclusion rate, Budget 2024 also proposed to increase the Lifetime Capital Gains Exemption (LCGE) for qualified farm property from $1 million to $1.25 million and continue adjusting it for inflation after 2026.
Why is this causing concern?
This change has significant implications for farm succession planning and the economic viability of family farms because of the burden it places on Ontario’s farm businesses, particularly at a time when a growing number of farmers are approaching retirement and farm succession planning is more important than ever.
The increase in capital gains inclusion would make farm succession planning less financially viable and present significant challenges for farmers reinvesting in their business.
What is OFA doing?
OFA is working closely with the Canadian Federation of Agriculture and national accounting firms to fully assess these proposed changes and their impact on farm businesses and farm business succession planning.
We are committed to ensuring that our farmers’ voices are heard in this critical discussion, and in partnership with CFA, are advocating for a supportive tax environment for farmers.
Member webinar: OFA is hosting a webinar in partnership with tax experts from BDO Canada on May 16 at 12 pm about these changes, what they mean, and what resources are available for farmers on the subject.
To register for the online webinar – follow the link: https://us02web.zoom.us/meeting/register/tZArdumorz8sGtMwsWvvUcQQ40yGtV38bnco
What should farmers do?
Consult with accountants: Farmers are encouraged to discuss the specific impacts of these changes with their accountants to understand the personal and operational effects.
Review business plans: Review and update business plans and asset management strategies as needed in light of the proposed changes.
Important deadlines to know: June 25, 2024 is the proposed implementation date for these changes. Farmers are encouraged to consult with their accountants regarding any potential activities to mitigate increased tax liabilities.
Where can I get more information?
Visit ofa.on.ca or contact Ben Lefort, This email address is being protected from spambots. You need JavaScript enabled to view it. or 519-822-0589.