Question Period Note: INTERGENERATIONAL FARM TRANSFER

Q1 – How does the Government support intergenerational farm transfer? Q2 –What is the Government doing to help address the high start-up costs of farming for the next generation?

R.1 - Several provisions under the Income Tax Act provide support for intergenerational farm transfers, including:
• The Lifetime Capital Gains exemption, which allows an individual selling a qualified property to use their capital gains to reduce their taxable income;
• The Rollover provision, which allows an individual to transfer the title of an asset on a tax-deferred basis; and
• The Reserve provision, which allows the proceeds from the sale of property to be claimed by the seller over up to five years. R.2 - The Government offers loan guarantees for farm transfers to beginning farmers under the Canadian Agricultural Loans Act program, and Farm Credit Canada offers free learning programs regarding succession planning and targeted loan products to facilitate farm transitions.

The Minister of Agriculture and Agri-Food’s 2021 mandate letter contained a commitment to “work with the Minister of Finance and farmers on tax measures to facilitate the intergenerational transfer of farms”.
Bill C-208 was introduced in 2021 to help farming families wishing to pass their farm to the next generation. The bill provided tax relief to families by allowing the transfer of family farms to children or grandchildren to be treated similarly to sales to unrelated parties. This change addressed the previous penalty where such transfers were taxed at higher dividend rates rather than the lower capital gains rates.
Several provisions under the Income Tax Act provide support for intergenerational farm transfers:
• Lifetime Capital Gains exemption, which allows an individual selling a qualified property to use their capital gains to reduce their taxable income;
• Rollover provision, which allows an individual to transfer the title of an asset on a tax-deferred basis; and
• Reserve provision, which allows the proceeds from the sale of property to be claimed by the seller over up to five years.
There are also a number of federal non-tax measures available to facilitate farm transfers:
• Loan guarantees for farm transfers and to beginning farmers are available under the Canadian Agricultural Loans Act Program;
• Farm Credit Canada (FCC) offers free learning programs regarding succession planning and targeted loan products to facilitate farm transitions.
Through agricultural policy frameworks, the Government has been – and will continue to be – committed to working with provincial and territorial counterparts to ensure the next generation of farmers is equipped for success. This collaboration has resulted in guides, workshops and/or financial support for succession planning which are available to farmers through provincial programming. Examples include:
• The Government of Newfoundland and Labrador’s Agriculture Business Program;
• The Government of Saskatchewan’s Farm Business Development Initiative; and
• The Government of Ontario’s Farm Succession Planning Guide.

• Young farmers are the future of Canada’s agriculture sector. This Government is committed to seeing farm families succeed and will continue to work with producers to facilitate the intergenerational transfer of farm businesses.

• Our government has already made amendments to the Income Tax Act that make it easier for farming families to pass their farm to the next generation.

• There are several other provisions under the Income Tax Act that support intergenerational farm transfers, including the higher Lifetime Capital Gains Exemption announced in Budget 2024.