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. It’s undeniable that COVID-19 has fundamentally affected Canada and the world’s economic outlook, and while Canadian agriculture is certainly not immune to those effects, the sector is uniquely well-positioned to drive Canada’s economic recovery.

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, tax laws in Canada have created an environment where it can be more expensive to transfer your farm assets to a family member than it is to transfer them to a third party.

With new entrants into the industry seeing a variety of difficult obstacles to entry, including massive capital costs, tax laws in Canada should not disincentivize willing entrants into the sector nor the continuation of multigenerational family farms.

This is in the interest of all Canadians, as 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 has voiced its support for the Private Bill C-208. This bill would make 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.

Creating a tax policy conducive to future generations of farm families continues to be one of the three key pillars of CFA’s pre-budget consultations for the past several years.

CFA Recommendations:

See our policy manual for more details on taxation in agriculture