'Collateral damage': Ontario farmers worry about proposed tax reform

Bill Morneau's proposed tax reforms are supposed to close loopholes for the wealthy, but the legislation also has some farmers worried about their family businesses.
Farmers have until Oct. 2 to weigh in on the federal government's proposed legislation. (Adrian Wyld/Canadian Press)

Ontario farmers aren't sure how the federal government's proposed tax reforms are going to affect them, and the clock is ticking on them to figure it out.

Last month, Bill Morneau launched a 75-day consultation around tax changes for private corporations. The idea is to close the loopholes that wealthy Canadians use to avoid paying what he calls their "fair share" of taxes.

But many family farms are technically corporations, and it's not clear how those businesses might be affected.

"These changes are targeted at professionals, and farmers seem to be what I would refer to as 'collateral damage,'" said Mark Wales, an Elgin County-based fruit and vegetable farmer.

Mark Wales says that farmers will suffer 'collateral damage' from the government's proposed tax reforms. (Submitted)

According to Statistics Canada, almost a quarter of Canadian farms are family corporations. Farmers will often choose to incorporate as a way of bringing young family members into the business, and to make succession planning easier down the road.

The proposed legislation could make that very difficult to do, said Wales.

The proposed changes could also make it cheaper for families to sell their farms to a third party, rather than passing them down to their children said Ben Lefort, a senior policy analyst with the Ontario Federation of Agriculture.

"That flies in the face of the tradition of the family farm in Ontario and Canada. So it's a huge issue for us," he said.

Ben Lefort of the Ontario Federation of Agriculture wants the government to shelve and re-think the draft legislation. (Submitted)

For people working in agriculture, part of the problem is simply the timing of the consultation period. The consultation lasts until Oct. 2, which means it overlaps with the busy harvest season for many farmers.

It also doesn't give farmers enough time to make sense of the complicated legislation and provide feedback, Lefort said.

"Given how substantial these changes are and how uncertain some of the draft legislation has been — how complex it's been to even understand — this isn't the way to have a meaningful conversation with industries and corporations."

Perrin Beatty of the Canadian Chamber of Commerce has also chimed in, calling the 75-day consultation "unfair."

'We need to hear all voices to get this right'

The federal government has emphasized that these draft changes are just a draft for now, and that they're open to hearing feedback from all Canadians.

"These are big changes. We know it will be an adjustment for many Canadians," said spokesperson Chloé Luciani-Girouard in an e-mail statement. "That's why we want to hear from Canadians on this. We want to be able to talk about it. We need to hear all voices in order to get this right." 

For his part, Lefort wants the government to shelve the current draft legislation and re-think how to best accomplish their goal of making taxation more fair without affecting farmers and other small businesses.  

"We want them to actually be looking for input from small businesses. And that's who is going to be greatly affected … 'corporation' doesn't mean that they're in the top income bracket."


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