Farm Ownership Transfer Taxation


Levelling the playing field for a new generation of family farms


See our policy manual for more details on taxation in agriculture

Quick Facts:

  • In 2011 the average age of a Canadian farmer was 54.
  • Estimates suggest upwards of $50 billion in farm assets will be transferred over the next decade.
  • It is more expensive and difficult to transfer your farm assets to a family member than it is to transfer them to a third party.
  • Increased capital requirements for those entering the industry have limited the pool of potential successors; less than a third of farms have identified a successor.

Working Toward Solutions:

CFA has stressed this issue as an emerging crisis to the federal government. Creating a tax policy conducive to future generations of farm families was one of the three key pillars of CFA’s 2017 pre-budget consultation. This issue was also at the forefront during our October lobby days, where farm leaders from across the country had over 20 productive meeting with both urban and rural MP’s.



CFA Recommendations:

  • Ensure agricultural rollover provisions recognize the breadth of family relations required to maintain family farming across Canada. By replacing the word “child” in subsect 73(3) of the Income Tax Act with the phrase “family member”, these important provisions would reflect and address demographic pressures facing the industry, creating opportunities for the next generation of farm families.
  • Create a level playing field between siblings and other family farm reorganizations. Anti-avoidance legislation currently prevents sibling-owned family farm corporations from being able to reorganize on a tax-deferred basis, an option available to most family farm members. Farms regularly support multiple households and to ensure farm families have the flexibility they need to maintain financially viable family farms, section 55(2) of the Income Tax Act must deem siblings as non-arm’s length for farm corporations.
  • Facilitate the transfer of family farms by leveling the playing field. In a sale of company shares to a non-related corporation, a holding company is generally used. This allows the purchaser to access the acquired company’s income stream and allows the vendor to access their enhanced capital gain exemption (CGE) on the sale. However, when dealing with family the proceeds are treated as a dividend, preventing farm families from being able to access their CGE. Section 84.1 of the Income Tax Act must be amended to facilitate access to the CGE for farm transfers to immediate family members, thus ensuring equal treatment to farm families.
  • Amend restrictions on claiming farm losses to encourage new entrants and investments in agriculture. Section 31(1) of the Income Tax Act unduly restricts many farmers with off-farm income from being able to claim more than $17,500 in farm losses, limiting investments and creating financial challenges for new entrants with full time off-farm work. In 2013, the federal government amended this provision to require that non-farm income be subordinate to farm income, contrary to an interpretation from the Supreme Court of Canada that outlined a more comprehensive income test (Craig v. the Queen). CFA recommends that the Supreme Court of Canada’s interpretation be reinstated, encouraging a more comprehensive test that considers multiple factors, beyond the predominance of farm vs. non-farm income.


Farm Ownership Transfer Taxation


Levelling the playing field for a new generation of family farms


Quick Facts:

  • In 2011 the average age of a Canadian farmer was 54.
  • Estimates suggest upwards of $50 billion in farm assets will be transferred over the next decade.
  • It is more expensive and difficult to transfer your farm assets to a family member than it is to transfer them to a third party.
  • Increased capital requirements for those entering the industry have limited the pool of potential successors; less than a third of farms have identified a successor.

Working Toward Solutions:

CFA has stressed this issue as an emerging crisis to the federal government. Creating a tax policy conducive to future generations of farm families was one of the three key pillars of CFA’s 2017 pre-budget consultation. This issue was also at the forefront during our October lobby days, where farm leaders from across the country had over 20 productive meeting with both urban and rural MP’s.

CFA Recommendations:

  • Ensure agricultural rollover provisions recognize the breadth of family relations required to maintain family farming across Canada. By replacing the word “child” in subsect 73(3) of the Income Tax Act with the phrase “family member”, these important provisions would reflect and address demographic pressures facing the industry, creating opportunities for the next generation of farm families.
  • Create a level playing field between siblings and other family farm reorganizations. Anti-avoidance legislation currently prevents sibling-owned family farm corporations from being able to reorganize on a tax-deferred basis, an option available to most family farm members. Farms regularly support multiple households and to ensure farm families have the flexibility they need to maintain financially viable family farms, section 55(2) of the Income Tax Act must deem siblings as non-arm’s length for farm corporations.
  • Facilitate the transfer of family farms by leveling the playing field. In a sale of company shares to a non-related corporation, a holding company is generally used. This allows the purchaser to access the acquired company’s income stream and allows the vendor to access their enhanced capital gain exemption (CGE) on the sale. However, when dealing with family the proceeds are treated as a dividend, preventing farm families from being able to access their CGE. Section 84.1 of the Income Tax Act must be amended to facilitate access to the CGE for farm transfers to immediate family members, thus ensuring equal treatment to farm families.
  • Amend restrictions on claiming farm losses to encourage new entrants and investments in agriculture. Section 31(1) of the Income Tax Act unduly restricts many farmers with off-farm income from being able to claim more than $17,500 in farm losses, limiting investments and creating financial challenges for new entrants with full time off-farm work. In 2013, the federal government amended this provision to require that non-farm income be subordinate to farm income, contrary to an interpretation from the Supreme Court of Canada that outlined a more comprehensive income test (Craig v. the Queen). CFA recommends that the Supreme Court of Canada’s interpretation be reinstated, encouraging a more comprehensive test that considers multiple factors, beyond the predominance of farm vs. non-farm income.

To keep updated on this issue and others affecting agriculture in Canada, sign up to our CFA in Action newsletter.


Farm Ownership Transfer Taxation


Levelling the playing field for a new generation of family farms

Quick Facts:

  • In 2011 the average age of a Canadian farmer was 54.
  • Estimates suggest upwards of $50 billion in farm assets will be transferred over the next decade.
  • It is more expensive and difficult to transfer your farm assets to a family member than it is to transfer them to a third party.
  • Increased capital requirements for those entering the industry have limited the pool of potential successors; less than a third of farms have identified a successor.

Working Toward Solutions:

CFA has stressed this issue as an emerging crisis to the federal government. Creating a tax policy conducive to future generations of farm families was one of the three key pillars of CFA’s 2017 pre-budget consultation. This issue was also at the forefront during our October lobby days, where farm leaders from across the country had over 20 productive meeting with both urban and rural MP’s.

CFA Recommendations:

  • Ensure agricultural rollover provisions recognize the breadth of family relations required to maintain family farming across Canada. By replacing the word “child” in subsect 73(3) of the Income Tax Act with the phrase “family member”, these important provisions would reflect and address demographic pressures facing the industry, creating opportunities for the next generation of farm families.
  • Create a level playing field between siblings and other family farm reorganizations. Anti-avoidance legislation currently prevents sibling-owned family farm corporations from being able to reorganize on a tax-deferred basis, an option available to most family farm members. Farms regularly support multiple households and to ensure farm families have the flexibility they need to maintain financially viable family farms, section 55(2) of the Income Tax Act must deem siblings as non-arm’s length for farm corporations.
  • Facilitate the transfer of family farms by leveling the playing field. In a sale of company shares to a non-related corporation, a holding company is generally used. This allows the purchaser to access the acquired company’s income stream and allows the vendor to access their enhanced capital gain exemption (CGE) on the sale. However, when dealing with family the proceeds are treated as a dividend, preventing farm families from being able to access their CGE. Section 84.1 of the Income Tax Act must be amended to facilitate access to the CGE for farm transfers to immediate family members, thus ensuring equal treatment to farm families.
  • Amend restrictions on claiming farm losses to encourage new entrants and investments in agriculture. Section 31(1) of the Income Tax Act unduly restricts many farmers with off-farm income from being able to claim more than $17,500 in farm losses, limiting investments and creating financial challenges for new entrants with full time off-farm work. In 2013, the federal government amended this provision to require that non-farm income be subordinate to farm income, contrary to an interpretation from the Supreme Court of Canada that outlined a more comprehensive income test (Craig v. the Queen). CFA recommends that the Supreme Court of Canada’s interpretation be reinstated, encouraging a more comprehensive test that considers multiple factors, beyond the predominance of farm vs. non-farm income.

To keep updated on this issue and others affecting agriculture in Canada, sign up to our CFA in Action newsletter.


Farm Ownership Transfer Taxation

Levelling the playing field for a new generation of family farms.

Quick Facts:

  • In 2011 the average age of a Canadian farmer was 54.
  • Estimates suggest upwards of $50 billion in farm assets will be transferred over the next decade.
  • It is more expensive and difficult to transfer your farm assets to a family member than it is to transfer them to a third party.
  • Increased capital requirements for those entering the industry have limited the pool of potential successors; less than a third of farms have identified a successor.

Working Toward Solutions:

CFA has stressed this issue as an emerging crisis to the federal government. Creating a tax policy conducive to future generations of farm families was one of the three key pillars of CFA’s 2017 pre-budget consultation. This issue was also at the forefront during our October lobby days, where farm leaders from across the country had over 20 productive meeting with both urban and rural MP’s.

CFA Recommendations:

  • Ensure agricultural rollover provisions recognize the breadth of family relations required to maintain family farming across Canada. By replacing the word “child” in subsect 73(3) of the Income Tax Act with the phrase “family member”, these important provisions would reflect and address demographic pressures facing the industry, creating opportunities for the next generation of farm families.
  • Create a level playing field between siblings and other family farm reorganizations. Anti-avoidance legislation currently prevents sibling-owned family farm corporations from being able to reorganize on a tax-deferred basis, an option available to most family farm members. Farms regularly support multiple households and to ensure farm families have the flexibility they need to maintain financially viable family farms, section 55(2) of the Income Tax Act must deem siblings as non-arm’s length for farm corporations.
  • Facilitate the transfer of family farms by leveling the playing field. In a sale of company shares to a non-related corporation, a holding company is generally used. This allows the purchaser to access the acquired company’s income stream and allows the vendor to access their enhanced capital gain exemption (CGE) on the sale. However, when dealing with family the proceeds are treated as a dividend, preventing farm families from being able to access their CGE. Section 84.1 of the Income Tax Act must be amended to facilitate access to the CGE for farm transfers to immediate family members, thus ensuring equal treatment to farm families.
  • Amend restrictions on claiming farm losses to encourage new entrants and investments in agriculture. Section 31(1) of the Income Tax Act unduly restricts many farmers with off-farm income from being able to claim more than $17,500 in farm losses, limiting investments and creating financial challenges for new entrants with full time off-farm work. In 2013, the federal government amended this provision to require that non-farm income be subordinate to farm income, contrary to an interpretation from the Supreme Court of Canada that outlined a more comprehensive income test (Craig v. the Queen). CFA recommends that the Supreme Court of Canada’s interpretation be reinstated, encouraging a more comprehensive test that considers multiple factors, beyond the predominance of farm vs. non-farm income.

To keep updated on this issue and others affecting agriculture in Canada, sign up to our CFA in Action newsletter.