A recent change to the capital gains tax by the federal government is leaving Saskatchewan farmers worried about retirement and handing down their property to family.
Many in the agriculture industry say they are disappointed with the change.
“We need to be given a free hand and to be able to work or produce food and export products to be shipped globally and without being taxed to death on some of these things,” said Bill Huber, the Saskatchewan Association of Rural Municipalities’ acting president.
As of June, the capital gains inclusion rate increased from one-half to two-thirds for gains of over $250,000 per year.
The Lifetime Capital Gains Exemption, which allows small businesses to avoid paying capital gains when selling shares, also increased from $1 million to $1.25 million.
“That hasn’t kept pace with the rising costs and inflation on farmland,” Huber said.
The federal government says the changes will make the system more fair by making taxation more income-neutral and narrowing the tax advantage between capital gains and other income.
But not everyone agrees.
“I hear that crackle in their voices and the frustration and the fear every day,” said Ted Cawkwell, agriculture specialist for Cawkwell Group, which specializes in Saskatchewan farm realty.
Cawkwell says he has already noticed fewer people are looking to buy land.
“People are going to look seriously at best when they’re entering farming and be like, is this an industry that I want to be in?”
Saskatchewan Agriculture Minister David Marit said the changes add another burden for farmers.
“We need to get more young people engaged and a tool like this, what the federal government has just done just puts another burden on the whole transfer from intergenerational transfer,” he said.
The Saskatchewan government is joining other provincial ministers in asking the federal government to reverse the changes, saying they “unfairly” target producers.
“We want to make sure that the federal government knows that there was pretty good support right across Canada from the ag ministers to say this is obviously a bad policy decision,” Marit said.
The Saskatchewan Association of Rural Municipalities says farmers need support, not more taxes.
“I’m not opposed to paying tax, but it’s got to be fair tax and affordable,” Huber said.
— with files from Nicole Healey, Global News