28 / 52
Winter
2018
Grains
West
28
Feature
BY GEOFF GEDDES • IMAGES COURTESY OF THE CANADIAN FEDERATION OF AGRICULTURE AND THE GOVERNMENT OF CANADA
Proposed changes had farmers seeing red (ink)
O STAY IN THE BLACK,
farmers must adapt to change
at every turn, so why did
recently proposed tax changes by the
federal government cause such a furor
in agriculture? According to industry
members, there was fear that as Ottawa
targeted “fair taxation of the wealthy one
per cent,” farmers would certainly be
caught in the crossfire.
The proposed revisions were
announced in July 2017 with the intent
of introducing them to Parliament in
the fall. They were designed to close
three loopholes that, according to the
government, enabled high-earning
business owners to avoid higher tax rates.
The changes targeted income
sprinkling, which allows business owners
to split their income among family
members, whether those family members
are involved in the business or not. The
government also proposed changing
methods for converting income into
dividends and capital gains, as well as
limiting passive business income.
While the government may have
braced to feel a degree of heat for these
moves, it was likely jarred by the firestorm
that followed.
“These were sweeping changes,” said
Alberta Wheat Commission chair Kevin
Auch. “We saw a lot of reaction from the
farming community and on social media.
People were really concerned about what
this could mean for their livelihood.”
Auch, along with AWC general
manager Tom Steve and government
relations and policy manager Erin
Gowriluk were the first farm organization
representatives to meet with the Prime
Minister’s Office and officials of Finance
Canada on the taxation issue in early
September in Ottawa.
According to Merle Good, an
experienced farmmanagement adviser
and farm succession expert, this concern
was well-founded. One exception was
income sprinkling, which Good saw as
less problematic since “most farmers live
modestly and don’t have a lot of income
to sprinkle.”
The government was quick to reassure
farmers on this provision, as well. “We
want to be clear that family members who
work on the farm and contribute to the
business won’t be affected by proposed
changes,” said Daniel Lauzon, Finance
Canada director of communications.
More concerning for Good was the
limiting of passive income. “You can’t
compare passive income earned in
a profession such as medicine to the
situation in a resource-based industry
like agriculture,” he said. “In farming, it
takes at least $9 to $11 of capital to create
T
Tax
Trauma