Thank you for taking time to sit down for an interview with Kelvin Heppner from Real Agriculture to address concerns regarding your government’s proposed tax changes — many say the most sweeping to business taxes in 50 years.
To be honest, your replies left me perplexed. Since farm organizations, farmers and accounting firms became aware of Finance Minister Morneau’s “Tax Planning Using Private Corporations” proposal, they’ve been raising concerns.
And as our industry was not consulted prior to the announcement, which coincidentally was during our busiest season, we’re asking for an extension on the incredibly short July 18th – October 2nd consultation period. Farmers have made time during harvest to reach out to you, Minister Morneau, Prime Minister Trudeau and other Members of Parliament with letters, phone calls, petitions and on social media. Yet when asked if you would speak up on our behalf, you state, “The fact is there’s really nothing to speak up against yet.” Have not heard our collective voices?
As farmers we take a significant risk every spring when we put a crop in the ground. We rely on Mother Nature to cooperate and hope for a decent harvest to recoup our investment in the fall. And then, we hope commodity prices reach the point to give us a decent return. We cannot demand an increase in the markets when our expenses go up, or our crops fail. Along with the financial risk, we have no employee benefits — vacation pay, pension plans, maternity/paternity leave etc. So how can you fairly compare our income to a wage-earning employee?
There is a major discrepancy between what you and the Finance Minister are saying and what accounting firms (BDO, MNP) and certified professional accounts are telling us regarding the dramatic, negative impact on our businesses. Your reply, “What is the discrepancy, I’d have to ask,” , and “I would have to know what changes.”
The discrepancies include capital gains, income splitting, reasonableness tests, passive income (i.e. saving to upgrade/repair/expand to avoid deficit spending & keep debt load manageable), estate taxes and overall tax burden.
In regards to intergenerational transfers you state, “I’m not sure what the accountants are referring to,” and question “In what way?” (will it be more expensive.)
Many farms have, or are in the process of, incorporating in order simplify succession planning, make it financially viable for parents to retire while allowing their children to carry on the farm operation. Only 16% of young people are coming back to the family farm and now it will cost up to three times more to pass it onto them than to sell to an outside entity. How can that be? And how will we maintain family farms that so many Canadians value and trust?
I look at our farm, and those around us — we are not the wealthy 1%. We are middle class — the very ones your government claims to be ‘protecting’. Come visit our homes, tour our farms, sit at our kitchen tables and see for yourself our perceived ‘tax shelters’.
You admit, “Perhaps there are problems. If there are, be sure we know. That’s why we have a discussion paper, to make sure we address the issues as well as we possibly can.” Yet, if the draft legislation is enacted, some measures are to be retroactively effective July 18, 2017.
Well Minister MacAulay, we are trying our best to convey our concerns — as are farm organizations, chambers of commerce and so many others. So please, speak up on our behalf. Extend the 75-day consultation period. Give all those impacted a chance to voice their concerns. Fully examine the effects these changes will have on agriculture, small businesses and our communities.
We work hard and take enormous risk in farming. That should not be punished and undermined by unfair taxation. If it is truly the wealthy you are after, revamp taxes accordingly.
To contact Agriculture Minister Lawrence MacAulay:
Phone: 613-995-9325 Fax: 613-995-2754 (Ottawa,ON)
Phone: 902-838-4139 Fax: 902-838-3790 (Montague, PEI)