Farmers worry over future under Liberal tax reforms

Some farmers in Ottawa are worried that proposed changes to federal tax rules around incorporation could affect the future of their farms and their families.

Melinda Foster-Marshall rushed from the barn to a meeting held on the issue Thursday night by Conservative MP Pierre Poilievre.

Her family's farm incorporated a few years ago and she's worried about what the tax changes will mean for the long-term sustainability of the farm.

"The margins in farming, they're not high," she said. "So if you can keep a couple extra percentage in that farming operation, it means keeping it going so hopefully the fourth generation can have a good go at it as well."

She hopes the government will add more precise definitions and abandon the proposed changes on the capital gains exemption and dividends, Foster-Marshall said.

'Implications of this are massive'

The meeting also heard from farmers concerned about using the current tax system for retirement planning and reducing the cost of transferring their property to the next generation.

Poilievre, the Conservative finance critic, said the proposed changes would make it more expensive for a family member to buy a farm than for a third party. 

"The implications of this are massive," he added. "It would fundamentally transform the Canadian countryside."

The proposed changes do not mention eliminating the qualified farm property transfer. The transfer allows farmers to pass on farms to family members without incurring any tax penalty, so long as the new owner does not sell the farm.

3-part tax reform plan

Finance Minister Bill Morneau has said the changes are about fairness and going after individuals who are using incorporation to avoid the higher personal income tax rate.

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The reforms discussed include eliminating income "sprinkling," which allows incorporated individuals to shift income to family members who don't necessarily work for them and get taxed at a lower rate.

Another reform is reducing the use of private corporations to make passive investments in stocks and real estate. A third reform would eliminate the ability to convert a corporation's earnings into capital gains, which are taxed at a lower rate. 

'Great Canadian tax revolt'

Conservative politicians have been organizing meetings on the Liberal tax reforms in several communities. Poilievre opened his prepared statement by welcoming the crowd of more than 350 to "the great Canadian tax revolt."

"After the government has waged full-out war on our entrepreneurs, they've had enough," Poilievre said. "They're standing up and they're fighting back."

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The meeting also included local conservative politicans, including Renfrew–Nipissing–Pembroke MP Cheryl Gallant; the Ontario PC candidate for Carleton, Goldie Ghamari; and Carleton—Mississippi Mills MPP Jack MacLaren.

The meeting was about creating a plan to oppose the tax reforms, Poilievre said. His staff handed out petitions and told attendees to participate in Finance Canada's public consultation.

Poilievre also told people to put pressure on Liberal MP Wayne Easter, the Prince Edward Island politician who recently said his government should slow down on tax reform and who has a role in its future as chair of the House of Commons finance committee.