Agriculture Committee on Oct. 31st, 2024

[Bobby Morrissey, Liberal, Egmont, PE]

The intergenerational has always been a sticking point in the farm community and some other family-owned businesses.

You referenced in your opening statement the impact on that versus where it was before.

[Scott Ross]

One of the most immediate impacts is that those who have active plans in place.... We do regularly hear that succession planning can take upwards of a decade to operationalize and work through.

One of the challenges we heard right away with the sudden increase in the capital gains inclusion rate was the reality that anyone who was midway in that process had to go back, reassess, retool and potentially change what could be a plan that has been in place and been completed for years at that point in time. That is one of the most immediate concerns.

[Bobby Morrissey, Liberal, Egmont, PE]

That was verified by CRA.

[The Vice-Chair, Conservative, John Barlow]

Thanks, Mr. Morrissey. That's your time.

Thanks, Mr. Ross.

Mr. Perron, you have the floor for six minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

I want to thank the witnesses for joining us today. We all know that their time is valuable and that they have other things to attend to on their farms.

Ms. Bissonnette, I would like to address your five proposals.

First, you proposed a collaborative review of the increased capital gains inclusion rate with the community. Can you take about 30 seconds to explain your position on this?

[Julie Bissonnette]

As with all agricultural measures, we prefer to be involved. Sometimes, the government thinks that it's taking the right approach. However, we can see that it isn't working in reality. The approach may work for a few years in other businesses, but not in agriculture. It's important to work with us to establish common criteria or objectives.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you.

We're working on something a bit vague here. We don't have any details regarding the implementation of the increased capital gains inclusion rate. That's why we invited you here. We wanted to hear from people in the farming community so that they could make recommendations for us to implement.

Can you explain your proposal to relax the rules surrounding the transfer of farms to other family members? I thought that Bill C‑208 resolved a good portion of this issue.

[Scott Ross]

The challenge in that regard is specific to a couple of issues. One is that treatment is available to the majority shareholder and not necessarily to minority shareholders in those corporations. Therefore, when we see multiple families operating as shareholders under a single farm, some may not have access to that treatment.

The other is also for unincorporated farms. There is still not the same breadth of family relations included in those treatments around the agricultural rollover provisions.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Okay. Thank you.

At just about every committee meeting, I talk about business risk management programs. At times, we can get a bit discouraged too.

Ms. Bissonnette, how do you feel about a government that seemingly wants to wait until 2028 less two days before starting to consult the farming community, when we know full well that the business risk management programs simply aren't working? Nothing's working anymore. I bet that you can hardly wait to get started now, tomorrow morning.

[Julie Bissonnette]

I personally considered it vital to point out this aspect, meaning farm transfers. We've been saying all along that these transfers are worth millions of dollars. In addition to the transfer, we have the human component, the agreement with the family, the new inputs, and so on. The pressure of millions of dollars is then placed on young farmers. If it rains all summer, they could lose their crop. Risk management programs must be adapted to meet our needs in the face of climate change.

It's also important to control everything beyond our control. This would mean less stress for young farmers. They're asked to take on so many millions of dollars in debt, even though they may not end the year with any income. It's really necessary to insure, if you will, everything beyond our control. That's all.

It's important to eliminate as much stress as possible. We're talking about farm transfers, but we also need to consider the interests of young farmers. Families used to be large. However, as the years go by, families are shrinking, farms are growing and the situation is becoming more complex. It's vital to look beyond the issue of farm transfers. It's really important to ensure that young people will continue to enjoy farming. This can be accomplished by removing sources of stress and by relieving pressure. This definitely figures into the next solutions to consider, in order to achieve tangible results.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Okay. Thank you.

I see that my time is running out. I would like you to send the committee your five recommendations in a clear written format so that we can analyze them properly.

I'll give you time to explain your fourth and fifth proposals in greater detail.

[Julie Bissonnette]

I spoke a bit about child care earlier. People work outside the home and farming in general requires many hours of work to begin with. At the very least, we need child care services adapted to farmers' schedules. We start work early in the morning and finish late in the evening, depending on the crops. Pilot projects are under way, but they must be made available across Canada. This would also take some of the pressure off the daily lives of all families, including grandparents at times. This would take the pressure off everyone.

Second, I think that it's important to focus on young farmers' organizations. It's a real asset to have networking opportunities. Each farm transfer is different. For some transfers, the process moves quite quickly, while for others, it takes a long time. We might take part in training courses and conferences, but each case is different. The networking opportunities available to young farmers give us the chance to talk about these issues. By talking to each other, we come to understand things, which helps us to grow. We're always alone on the farm, and farming isn't easy. It's important to have a place to go out, to network, to share ideas and to give young people support, training and information. In my opinion, the next generation of Canadian farmers must be well represented across Canada and in the provinces.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Ms. Bissonnette.

[Julie Bissonnette]

Thank you.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Perron and Ms. Bissonnette.

Now we go to Mr. Cannings for six minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Thank you, all, for being here. I'm going to start with Mr. Larkin.

It's good to see you again. It was only yesterday or the day before, I think, that we met and had a conversation about this.

I think it was you who mentioned the increasing complexity of the tax structures. I think the government brought in this change to the capital gains to try to capture some of the income that other—I'm not talking about farmers here—groups, other individuals and corporations, who were using that capital gains benefit...because really, it's a benefit because you're only getting taxed on half your income. They wanted to try to capture more of that and make that less of an easy win for wealthy individuals or corporations.

By making that increase, you have farmers caught in the crossfire. They're innocent bystanders who are seemingly caught up in this, even though they're not part of that group that are trying to get around paying their fair share of taxes. The government increases the complexity of all this to try to do this. I know your solution is to make it less complex, to kind of go back to where we were, but then we would lose the benefits as a Canadian society in trying to make the wealthy pay their fair share.

I'm just wondering if there's a solution that would increase the complexity even more by excluding farmers from this, especially family farmers. I don't know how that would work or how it would be structured, but is that a possible solution here? If so, how might that work?

[Kyle Larkin]

That's a great question. In my remarks, I noted that the tax code is becoming more complicated for all farmers. No matter if you're a 10-acre farm or a 10,000-acre farm, I can guarantee you that, when you call your farm tax accountant at the time of succession planning, you're going to be paying more fees now because the tax code has become more complicated because of all these changes.

Let me dig into that a little more. Prior to these changes, we had a 50% capital gains inclusion rate. It was pretty simple. Now we have a 50% capital gains inclusion rate up to $250,000. Then it goes up to 66% after $250,000. You also have this new program or policy called the Canadian entrepreneurs' incentive that somehow digs into there. You have the lifetime capital gains exemption. It's complicated, very complicated. It's complicated for us, and it's complicated for farmers and tax accountants as well.

That's why our ask to the government is to have a very targeted exemption specifically for farmers and specifically for intergenerational transfers. That's why we've been asking the government to bring the capital gains inclusion rate back to 50%, just a simple 50% for intergenerational transfers. If the father or mother is transferring the farm to their son or daughter, they'd be captured in that, but if the father or mother are selling to a developer, for example, they wouldn't be captured in that.

Our ask is really to support family farms and the continuation of family farms, which are quite simply dying by a thousand cuts almost every single day.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'm sorry. I must have misunderstood that simplicity. I thought you just wanted to move things back to where they were. You want to have that exclusion for the transfer of family farms and that would be under the old regime or whatever, so that all that family transitional planning that's been going on would stay the same.

[Kyle Larkin]

Yes, we want the government to be an equal partner with family farms. Family farms, as I mentioned in my opening remarks, are already facing death by a thousand cuts, be it from the rising cost of inputs, our international markets, labour strife across the country, increased taxation, changing weather patterns—you name it. The life of a farmer is more difficult nowadays than it ever was. That's why we're seeing 500 to 1,000 family farms lost in Canada every single year. If we keep going down this path due to increased government taxation and regulation, at some point in time, family farms aren't going to be the backbone of our agricultural sector and that will be a real shame.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Ms. Bissonnette or Mr. Ross, do you want to comment on that as well?

[Scott Ross]

We would suggest very similar treatment. It's what we would prefer to see as an outcome as well. There are measures that were employed, as Mr. Larkin noted in his opening remarks, through Bill C-208 that can characterize whether something is a real, genuine intergenerational transfer, and we would look to see that test applied to ensure that there is a targeted exemption for intergenerational farm transfers as well.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

In 30 seconds, could you just remind us what Bill C-208 did to help that transfer?

[Scott Ross]

It essentially levelled the playing field for those who were looking to do real transfers to those who were deemed not at arm's-length—or family members—versus those who were selling to a third party at the time, specifically for incorporated businesses.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

[The Vice-Chair, Conservative, John Barlow]

Thanks, Mr. Cannings.

We'll now go to our second round of questioning with Ms. Rood for five minutes, please.