‘Two, three, four million dollars’ to inherit a farm: advocate

An advocate is calling for additional exemptions that would allow farmers to pass on their land to other family members without getting hit by what could be millions of dollars in taxes.

Derryn Shrosbree, a farmer and advocate with 33seven, told CTV Your Morning on Monday that there’s an exemption for children but nieces and nephews should also be exempt, which “would be great for farming and to keep rural communities vibrant.”

“There’s a lot of cases where nieces and nephews have been actively working on the farm for 10 or 15 years already, but then they can’t actually inherit the farm without massive amounts of capital gains tax,” he said.

More than 40 per cent of farmers will retire by 2033, according to a 2023 report from RBC.

Two thirds of those producers do not have a plan to transfer those holdings, “leaving the future of farmland in doubt,” according to the bank.

The Income Tax Act grants farmers the option to transfer the property to a “child” on a tax-deferred basis but not nieces and nephews. Shrosbee’s organization, 33seven, is advocating to update the law.

“Without immediate reform, tens of thousands of acres of ripe farmland could be lost to consolidation under control of foreign-owned agriculture giants,” according to 33seven.

Shrosbree called it “super unfair” for those relatives of farmers who want to enter the industry but struggle as its “prohibitively expensive.”

Farms used to go for “two, three hundred bucks an acre,” around 1980, Shrosbree said, but now he says land can go for $16,000 an acre.

Between 2020 and 2024, the value per acre of farmland and buildings rose from $3,570 in 2020 to $5,302 in 2024, according to Statistics Canada.

“The tax bill could be two, three, four million dollars,” Shrosbree said.

A statement from the federal government to CTV Your Morning said it would be “inappropriate to speculate on any potential or prospective changes” regarding the tax code.

‘Some of those towns are boarded up’

Canada lost between 2,500 and 3,000 farms a year between 2001 and 2021, according to Shrosbree and the National Farmers Union (NFU).

Statistics Canada, a source for the NFU report, shows Canadian farmer’s outstanding debt rising by about $10 million every year from 2020 to 2023, with a $20-million jump from 2023 to 2024.

“If you’ve driven through rural Ontario, some of those towns are boarded up,” Shrosbee said. “The last thing we want to see as Canadians is the demise of the rural economy, which generations of Canadians have built up.”

“We’ve built Canada on the backs of agriculture,” he added.

He suggested that the high taxes could lead to a chain of events that would break up farms and families, leading to a decrease in national food production which puts Canada’s food security at risk.

“In a time where we’re looking at Canadians to feed Canadians,” Shrosbree suggested, “this is an easy win for both sides of the aisle,” adding that granting nieces and nephews a tax-exemption would keep families, farms, and rural communities together. “It’s just a win-win for everyone,” he said.

Read Source Article: https://www.ctvnews.ca/canada/article/two-three-four-million-dollars-to-inherit-a-farm-advocate/