Grain Growers of Canada says proposed changes to the Canadian Entrepreneurs’ Incentive will help some grain farmers but won’t offset losses due to changes to the capital gains inclusion rate.
“Patchwork approaches and fragmented incentives won’t deliver the economic growth and support that Canada’s grain farmers and rural communities need,” the organization said in a news release today.
Yesterday, the federal government proposed changes to the Canadian Entrepreneurs’ Incentive. That program, which was rolled out in June, reduced the capital gains inclusion rate for eligible entrepreneurs to one third on a lifetime maximum of $2 million in eligible capital gains tax.
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The government proposed to eliminate the requirement that the business owner must be a founder who has held at least 10 per cent of common shares since founding.
“Following feedback that this ownership requirement may not meet the needs of entrepreneurs, particularly in the tech and farming sectors,” the government suggested reducing the minimum ownership level to five per cent of shares and minimum ownership time to any continuous 24-month period since the business’ founding.
The program initially required business owners to be engaged in the business on a “regular, continuous, and substantial basis” for the five years preceding the sale. The government proposed to reduce the period of engagement to any combined three-year period since the founding of the business.
They also proposed to expand the eligibility to all qualified farming and fishing property and some additional small businesses.
Budget 2024 announced the incentive would increase by $200,000 annually over ten years. The feds propose doubling that to $400,000 annually over five years.
Earlier this year, Grain Growers of Canada said that, according to its analysis, the changes to the capital gains inclusion rate would increase taxes on grain farms by 30 per cent. GGC and nine other organizations had previously lobbied to exempt farmers from the increase.
At the time, Canadian Federation of Agriculture president Keith Currie criticized the federal government for “ramming these very significant tax changes through while farmers are in the field planting” and not giving enough time for producers to assess the implications.
People can submit feedback to the draft legislation by emailing it to to [email protected] by September 11, 2024.
