As third-generation farmer Jake Leguee starts to prepare for the spring season, crops are not the only things he’s planting seeds for.
Alongside his sister and brother-in-law, Leguee runs a 17,000-acre farm in Fillmore, Sask., located about 100 km southeast of Regina, specializing in canola, durum, hard red spring weeds, lentils, and flax.
While rising costs and volatile global markets have been top-of-mind concerns for Leguee, he is also considering the future of his family farm.
“My oldest is 10 years old,” Leguee said. “That’s a long way away from him potentially being interested in taking over the farm, but that’s going to come fast. So we need to start thinking about that today.
“We don’t know what that transfer might look like. It might not be my kids, it might be one of my sister’s kids that wants to come back to the farm or it might be mine and not hers. So we just don’t know.”
Multi-family farmers like Leguee are looking to see changes to Canada’s Income Tax Act, and are pushing for broader exemptions for non-immediate family members.
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Under Canada’s Income Tax Act, farmers do not face a capital gains tax if they transfer assets to their children, grandchildren, spouse or common-law partner. But for those looking to pass land onto extended family, such as Leguee’s nieces or nephews, their profits may be taxed.
“With farmland increasing from $200, $300, $400 an acre up to $4,000, $8,000 sometimes $16,000 an acre, the tax bill on that sale has become extraordinarily high, which means that the nieces and nephews that have been farming that property for years cannot afford to continue farming because they can’t afford to pay the tax bill,” said Derryn Shrosbree, farmer and advocate with 33seven.
According to Statistics Canada, the average age of farm operators in the country is on the rise, with an average age of 56 in 2021. In the 2016 census, the average age of farmers was 55.
Meanwhile, the number of farms in Canada is also on the decline, dropping by nearly two per cent in 2021 from 2016.
Shrosbree says including extended family in the tax laws are ways to address these issues and can benefit all Canadians.
“It stays in the bloodline. The farms stay with the families and Canadians continue to farm for Canadians,” he said.
An official with Canada’s Department of Finance said in a statement to Global News that “further support” in the form of exemptions — such as the Lifetime Capital Gains Exemption (LCGE) and principal residence exemption — and capital gains reserves are also available to farmers looking to pass on their land to extended family members.
“While the government continually reviews tax rules to make sure they continue to be fair and appropriate, it would be inappropriate to speculate on any potential or prospective changes,” the statement said, adding that any amendments to the Income Tax Act will be made through legislation.
As for Leguee, along with change, he hopes to see more engagement with farmers directly.
“Work with us, include us in your consultations,” he said.
“We are business people. We know how to manage our operations and we know what can hurt us when it comes to policy.”
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