Thank you for this opportunity to present on behalf of the Canadian Cattle Association, or CCA, in your study on changes to the capital gains measures as announced in budget 2024.
My name is Jack Chaffe. I am the co-chair of domestic agriculture with CCA and past president of the Beef Farmers of Ontario. Along with my family, I own and operate a beef feedlot in southwestern Ontario.
CCA is the national organization representing Canada's 60,000 beef producers. The Canadian beef cattle industry is a significant driver of our economy and a global leader in sustainability, contributing $21.8 billion to Canada's GDP and supporting approximately 350,000 full-time equivalent jobs. A prosperous and thriving beef industry generates considerable economic, environmental and social opportunities and benefits to Canada.
CCA has been extensively engaged in discussions on changes to the capital gains since it was first announced last spring in the federal budget. Before we get into the specific measures announced, I need to emphasize that the current capital gains measure that includes intergenerational transfers of beef operations within families is critical. CCA is concerned that the recent changes to the capital gains tax will increase the requirement to sell off pieces of farms when they change hands. We need to ensure that the federal government does not jeopardize the current tax policy that allows the intergenerational transfer of beef operations within families.
In general, the lack of meaningful consultation time in advance of the announced changes is concerning. Beef producers have not had time to assess the changes and how they will impact their family operations. Each operation is unique. It has been difficult to quantify the changes in our sector on the whole without the proper consultation time.
We need to consider the impacts of the inclusion rate despite the changes announced on August 12. While we were pleased to see the changes to lifetime exemptions, other amendments to the measures are counter to those announced under Bill C-208 and its amendments in budget 2023. By increasing the capital gains inclusion rate, the federal government risks weakening the provisions under Bill C-208 that facilitate smoother intergenerational farm transfers to those younger producers.
The majority of Canadian farms operate under a family operation, but each farm is unique in its operational structure. To address the vast differences between those structures, producers need greater clarity regarding the changes between August 12 and those announced in budget 2024. The changes announced in the budget were done without consultation, which creates confusion for farmers whose operations are built on years of tax advice.
In addition to producers, tax advisers and accountants also require more time to assess the changes and how they will affect the families across Canada. Specifically, there are unanswered questions about whether farms qualify under the Canadian entrepreneurs' incentive, as an example. Although we are able to receive tax advice from our advisers, we need more guidance and clarification from the federal government on who qualifies for those incentives.
Regarding the timing of the proposal, the consultation period lasted only three weeks and during a busy time for the farmers. We therefore need more time to accurately analyze the impacts to our producers across Canada. Our sector is at risk of losing a significant portion of the workforce, as farmers may retire without viable succession plans. This also places Canada's rural economy at risk of declining. We need to ensure that government policies do not unintentionally contribute to the decline of agricultural production in Canada.
Thank you for your time. I would be happy to answer any questions that may come.