OTTAWA — After hearing from 60 witnesses, many working in agriculture, a senate committee released a report March 19 recommending the federal government raise the lifetime capital gains exemption on farmland.
The $1-million capital gains exemption simply won’t cut it anymore, the report says. “This tax exemption is not sufficient to enable the financing necessary to increase the amount of farmland under cultivation and therefore keep farms viable.”
The report on how to keep farmland in the hands of farmers noted concern about rising farmland prices and the next generation. “The biggest concern was how to enable young people to get into agriculture,” senator and committee chair Diane Griffin told Farmers Forum.
She added that a number of witnesses expressed concern about foreign ownership and the number of large investors, such as pension funds, buying up farmland and pushing up price.
Last year, the federal government proposed lowering the capital gains exemption but backed off due to huge public outcry. For many farmers, the capital gains exemption is necessary to get land into the hands of their preferred buyer, a family member.
Selling land is often part of a farmer’s retirement plan but very few are in the position to sell to a developer for top dollar. Last year, a Caledon-area farmer in the Greater Toronto Area sold his 150-acre farm to a developer for nearly $100-million, but that was a profoundly rare occurrence. The committee did not recommend a new capital gains exemption maximum.