Farm Ownership Transfer Taxation

Levelling the playing field for a new generation of family farms

Quick Facts:

Issue Overview

As the average age of the Canadian farmer continues to increase, effective succession planning is critically important, particularly for a sector that will transfer tens of billions of dollars in assets to the next generation in this decade alone.   

In many cases farmers plan to hand their farm down to their children who have grown up on the farm and are willing to take it over.   

However, new entrants into the industry face a variety of difficult obstacles to entry, including massive capital costs.   

Studies show that family farming encourages sustainable growth, environmental stewardship, and increased spending within one’s local community, not to mention its contributions to the social fabric of rural Canada. 

Working Toward Solutions:

CFA advocated its support for the Private Bill C-208, which has since received Royal Assent. This Bill has made it so that siblings are not deemed to be dealing at arm’s length and that, under certain conditions, the transfer of shares by a taxpayer to the taxpayer’s child or grandchild who is 18 years of age or older is to be excluded from the anti-avoidance rule of section 84.1.  

CFA has stressed this issue as an emerging crisis to the federal government for many years. As a sector where the vast majority of businesses remain family owned, maintaining the financial health of these businesses across generations is critical. 

CFA was pleased to see Budget 2024 respond to CFA’s recommendation to increase the Lifetime Capital Gains Exemption to $1.25 million, a critical tool in supporting intergenerational farm transfers. However, the increase to the inclusion rate on capital gains realized annually above $250,000 by individuals and on all capital, gains realized by corporations and trusts from one-half to two-thirds, holds the potential to make these same transfers more challenging for younger generations given the amount of capital required to remain competitive in modern agriculture.  

CFA Recommendations:

See our policy manual for more details on taxation in agriculture