REGINA—The Agricultural Producers Association of Saskatchewan (APAS) is expressing concern over the proposed changes to capital gains tax regulations and calling for a pause on them.
With parliament's recent prorogation, many people are left wondering how the proposed changes to capital gains tax rules are allowed to continue. While the changes are left in limbo, the Canada Revenue Agency will continue to collect new charges in the coming tax season.
In last year’s federal budget, an increase to the capital gains inclusion rate was proposed on any gains realized on or after June 25, 2024. Instead of the previous 50 per cent, the inclusion rate rose to 66.67 per cent—except for individuals and certain trusts (graduated real estate and qualified disability trusts), who still fall under the old rate on the first $250,000. Corporations and the majority of family trusts are affected by the new rate, and for individuals, the increase in the top tax rate on capital gains above $250,000 is approximately nine percentage points.
Meanwhile, agricultural producers are also left wondering exactly how the proposed changes will affect their operations, especially those with succession planning at top of mind.
“The majority of producers who do retire use the revenue from the sale of their land as their retirement fund,” explained APAS president Bill Prybylski. “The uncertainty of not knowing what are the tax rules right now? What are the capital gains rules? Is CRA going to enforce the rules, even though that they haven’t actually been passed through Parliament? So the biggest thing is the is the uncertainty.”
Since much of farm value is linked to land assets, the changes can have a huge impact on the family farm.
“It’s not a small amount of dollars we’re talking about anymore,” Prybylski said. “So it is very significant, the tax implications. How do producers plan but they don’t know what rules they have to follow?”
APAS is looking for a clearer picture on what the tax changes mean for farmers, requesting a meeting with the federal minister of national revenue, Marie-Claude Bibeau, but no answer has been forthcoming.
“We’ve sent her a letter requesting a meeting with her,” Prybylski said. “I will be in Ottawa for some other things, so I was hoping for a chance to meet with her while I’m in Ottawa, but we have, as of yet not heard back from her office.”
In addition to detailed information, APAS wants to see a pause in the changes until more in-depth talks can take place.
“We’re not optimistic a whole lot will happen, but we would like to see the changes paused until there can be some consultation and some some clarity from the government as to what the actual rules are going to be,” Prybylski says. “Even going forward from there, we’re not sure what the government is going to look like if there’s going to be an election call shortly after. There will be a non-confidence vote to call an election, there’s just so much uncertainty, and we would like to see things just put on hold until we can clarify.”
The Canadian Chamber of Commerce agrees with APAS, noting that the CRA “lacks clear legislative authority to implement this tax,” lauding an early campaign promise from the Conservatives to nix the change.
“Reversing this tax increase will help to bolster investment and entrepreneurship, and signal to the world that Canada is open for business,” said Jessica Brandon-Jepp, Senior Director, Fiscal and Financial Services Policy with the Canadian Chamber of Commerce. “We encourage the federal government and other political parties to also commit to not implementing this tax.”
