By Connor Lynch
OTTAWA — The federal government announced the latest slew of proposals to change small business taxes in Canada, and farmers dodged a bullet.
Last year, the government announced its initial proposed business tax changes that included a crippling of the capital gains exemption, a move that would’ve made it more expensive for a farmer to sell his farm to his own child than a stranger.
The federal government backed off on that proposal in October, completely stepping away from changing how capital gains work, and modifying a number of its other proposals.
Although the Canadian Federation of Independent Business and the Canadian Taxpayers Federation aren’t happy about the latest slew of proposals released in February, likely to be the final product, they agree that farmers are still far ahead of where they were.
“I will give the government credit for listening on this,” said federal director for the Canadian Taxpayer’s Federation Aaron Wudrick. The timing of the initial announcement was, for farmers, especially poor, given that it came during the summer when most were occupied in the field.
“I think it’s fair to say that farmers were heard.”
Ultimately the current proposal is “still a tax hike. It’ll be another billion squeezed out of small business by 2020,” according to federal tax projections, Wudrick said. “We’re facing a tax environment where there’s a lot of pressure (attracting business) south of the border.”
Senior vice-president of national affairs & partnerships with the Canadian Federation of Independent Business, Corinne Pohlmann, said that despite the government’s about-face on the tax issue, farmers aren’t entirely off the hook. Current proposals on passive investments and income sprinkling could be a headache for farmers. Rules on income sprinkling are likely to mean more paperwork rather than more taxes, however, and passive investment rules would only affect farmers collecting more than $50,000 on businesses held within a corporation. For a farmer to make that much, he’d have to have $1 million worth of stocks or bonds that were giving a 5 per cent return rate.