Thank you, Mr. Chair.
Good morning everyone, members of Parliament and Mr. Chair.
Thank you for inviting us to share our observations with your committee on the issue of business transfers.
My name is Julie Bissonnette, and I'm a dairy farmer in L'Avenir and the president of the Fédération de la relève agricole du Québec, or FRAQ. With me today is our public affairs coordinator, Véronique Simard Brochu.
We already introduced ourselves at our last appearance, but here is a reminder. The FRAQ is an organization that brings together 16‑ to 39‑year‑olds who share an interest in farming. We represent more than 1,700 members from across Quebec. We are here today to talk about the implementation of the tax measures contained in Bill C‑208.
Let me begin by quoting what I said during our previous appearance before the Standing Committee on Finance, which certainly sets the stage for today's discussion:
The next generation of business owners has been speaking out about the problem for more than 15 years. Hopefully, this time, it will be fixed once and for all.
As we have mentioned before, with the average age of farmers now over 55, there was indeed an urgency for the farming community to act. In fact, 70% of these future transferors would prefer to keep their businesses in the family. It is therefore the preferred method of transfer, especially since it is six times more likely to succeed than an external transfer.
With the bill passing in both Houses and receiving royal assent on June 29, 2021, we were finally able to celebrate this major victory. However, there was a lot of confusion following the Department of Finance's announcement on June 30, suggesting that implementing the legislation would be delayed.
We are very pleased to see that, last night, the department put an end to almost a month of confusion by finally clarifying farmers' questions. As the department states, “the changes contained in this legislation now apply in law.” This answers our biggest question, namely whether related farm transfers are now entitled to the same exemption as third‑party transfers.
However, we would like the department to make it clear that, if a genuine family transfer occurs between now and the passage of this potential bill, it will include those exemptions and will not be penalized by any measures to come. The government should clarify this issue so that tax experts and accountants can feel free to advise their clients on the transfer of their business without fear of misleading them. Members of Parliament may actually want to ask them this question this afternoon.
It is important to clarify this for the agricultural community. Given the importance of such legislation, the department did the right thing yesterday by providing answers to clear up the confusion that was rife. At the FRAQ, we believe that changing our tax system is a serious job that should not be done with a news release. That is why the right way of going about this is to let the current legislation do its job and then propose changes in a future bill, as was explained yesterday.
In terms of the next steps, it is clear that the government's intention is to facilitate farm transfers while protecting the integrity of the tax system. According to the news release, “forthcoming amendments are intended to make sure that it facilitates genuine intergenerational transfers and is not used for artificial tax planning purposes.”
We have no problem with that, as long as it does not interfere with genuine family farm transfers between family members. We therefore encourage the Department of Finance and members of Parliament to follow the example of the Quebec legislation, which has put in place several criteria to ensure the authenticity of family transfers. However, it is essential that the intentions of Bill C‑208 be maintained so that no parents are dissuaded from selling the family business to their children because of the tax system.
We must not forget that transferring a business is a very big step. Many factors need to be considered, and it is not simple. At the end of the day, all transfers are different and unique. Therefore, there cannot be a one‑size‑fits‑all definition for farm transfers. This must be kept in mind when setting future conditions. The inequity that has just been addressed should not be replaced by another barrier.
In conclusion, we wish to reiterate that we are grateful for the department's clarifications and look forward to future proposals. In the meantime, after the confusion over the past few weeks, it is good to know that the legislation is actually in force.
Our thanks to the members of the committee for seeking answers and for inviting us to share our first‑hand experiences.
Thank you for listening.