Sask. ag producers call for pause of capital gains tax rule changes

The Agricultural Producers Association of Saskatchewan (APAS) is calling for a pause of changes to the federal capital gains tax.

Last year's federal budget included a proposed increase to the capital gains inclusion rate. Beginning on or after June 25, 2024, the inclusion rate rose to 66.67 per cent from 50 per cent for capital gains over $250,000.

The plan was introduced in Parliament in September, but was killed along with all other proposed pieces of legislation when Parliament was prorogued this month at the request of Prime Minister Justin Trudeau.

Even so, following government practice around tax change proposals, the Canada Revenue Agency (CRA) has already begun collecting capital gains taxes at the new and higher rate.

Agricultural producers are left wondering why the CRA is using the new rules before they were approved and how the proposed changes will affect their operations, especially for 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," APAS president Bill Prybylski said. "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 and has requested a meeting with the federal Minister of National Revenue Marie-Claude Bibeau.

"We've sent her a letter requesting a meeting with her," Prybylski said. "I will be in Ottawa for some other 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 said.

"Even going forward from there, we're not sure what the government is going to look like, if there's going to be a 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 agreed with APAS's statement, saying the CRA "lacks clear legislative authority to implement this tax."

"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 of 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."

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