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?
Q3 – Will the Government amend the Income Tax Act to make it easier for families to pass on farms to the next generations?

R1 - Several provisions under the Income Tax Act provide support for intergenerational farm transfers, including:
• The Lifetime Capital Gains exemption, which was increased to $1.275 million as of 2026, 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, or 10 years if made to a child, grandchild, or great-grandchild.
R2 - 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.
R3 - The Government is continually reviewing means by which to improve the tax system while taking into account competing priorities and available fiscal resources. The views and suggestions of Canadians are essential to ongoing efforts to ensure that the tax system is fair and effective.

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 (increased to $1.275 million of eligible capital gains as of 2026), 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.
The rollover may be claimed for a child, grandchild or great-grandchild or their spouse or common-law partner. However, nieces and nephews are presently not eligible for these benefits, with some stakeholders calling on the Government to amend the Income Tax Act to include extended family members in the eligibility criteria for farm asset rollovers.
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.
The Government of Canada proposed increasing the capital gains inclusion rate from 50% to 66.67% on June 24, 2025. Budget 2025 confirmed that the proposed change would not be adopted and that the inclusion rate would remain at 50%.
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.
• Budget 2025 confirmed that the capital gains inclusion rate will remain at 50% (including gains related to farming). The Lifetime Capital Gains Exemption now applies up to $1.275 million of eligible capital gains, as of 2026, with ongoing indexing for inflation.