Lambton farmers concerned federal tax changes will hurt family farms


Kevin Marriott says Lambton farmers are angry as they learn some of the changes plans to the tax system.
Federal Finance Minister Bill Morneau announced the proposal last October, but farm organizations are just now beginning to understand how it could affect the family farm.
The finance minister’s plan aims to reduce incoming splitting in incorporated companies in an effort to regain $250 million in tax revenue.
That affects all of Canada’s 1.8 million incorporated businesses, including about 25 per cent of family farms which are incorporated.
Ben Lefort of the Ontario Federation of Agriculture says this will have a big financial impact on family farms.
“They are going to have to pay a lot more in accounting and lawyer fees to redo tax and succession plans and reevaluate them to see if they work in those proposals,” says Lefort.
While the OFA understands the government’s desire to close a tax loophole, Lefort says the government is not taking into account that a lot of those farm family members involved in income splitting work on the farm and deserve a wage.
Marriott agrees saying farmers could pay a spouse for the work on the farm but it wouldn’t have nearly the tax advantages as income splitting.
He adds many farmers have gone to a lot of expense to incorporate and now the rules are changing again.
About 40 farm groups are also concerned the changes will make it easier to sell the family farm to a stranger than to pass it along to children.
Lefort says that’s “not the connection we are trying to make that goes under the tradition of family farms.” Lefort says.
Marriott who is with the Lambton County Grain Farmers, says there is “quite an uproar right now” about the proposals, adding it comes after the federal government cut farm support programs as well.  “It’s not just a few changes, it’s coming all at once.”
Lefort says it is important for farmers and small business owners who are incorporated to talk to their MP’s and share their opinions. However, he thinks chances of the government changing their proposals are slim.
“They have attached a draft legislation with this consultation document. That is a big indication they are very intent on moving forward,” Lefort says. “Also, the short consultation period in the middle of the summer, that doesn’t give people a lot of time to wrap their heads around it.” You have until Oct. 2 to register your concerns.
Lefort would like to see the proposed changes scrapped and the government start consulting with small business owners on the tax changes.