Thank you, Ron.
I'm going to stress that, due to the timeline, our assessment is not yet complete. We continue to hear of new issues and have come together with other farm groups to commission a more detailed analysis of the farm-specific impacts, but this won't be available until October 2. Preliminary results indicate additional tax liabilities well in excess of $1 million on a typical family farm over a 20-year period.
On income sprinkling, we note a few key concerns. Farm families live where they work, and contributions to the farm come about in numerous direct and indirect ways, to which a one-size-fits-all reasonableness test will not do justice. Family farm transfers can take place over decades, with farm children often holding interests in the farm while pursuing an education or working off farm to build skills and diversify revenue. The strict reasonableness test for those between the ages of 18 and 24 creates particular challenges on this front.
Family farms also have access to the farm rollover provisions, which allow for transactions below fair market value. The vagueness in the current proposals creates uncertainty for any assets currently transferred in this manner.
On passive investments, the question remains as to how rented farmland and AgriInvest funds will be treated. Broader concerns persist about farmers' plans for retirement and future investment. The latter would directly undermine the industry's capacity to meet the ambitious growth targets for agrifood exports set in budget 2017.
Finally, changes to the capital gains treatment create undue complications for intergenerational farm transfers. Changes to prevent converting income to capital gains would reinforce inequities the CFA has long noted, which discourage selling family farms to family members. Limitations on access to the capital gains threaten long-term succession plans put in place under the current tax regime, creating additional complexity and costs.
The 2018 special election is also fraught, creating unmanageable tax liabilities through alternative minimum tax treatment and a series of potential tax traps.
Each of these concerns speaks to the potential for significant unintended consequences.
I'll now pass this back to Ron to lay out CFA's views on the path forward.