Canada: The Liberals Want To Wipe Out The Family Farm!?

I don't write as many blogs as other members of my firm, however, today my concern rose enough to put fingers to keyboard. On the September 7, 2017 edition of the CBC Alberta @Noon show (the portion that you'll be interested in starts at about 39:25 and ends at about 42:45), Liberal advisor Michael Wolfson, a University of Ottawa economist, admitted to some of the consequences that the private corporation tax proposals may have for family farms. By way of explanation, it was Mr. Wolfson's 2015 paper – eventually published in the Canadian Tax Journal – that formed part of the Liberal's 2015 election platform and is part of the basis for the Liberal's controversial private corporation tax proposals. As recently as August 9, 2017, Finance Minister Bill Morneau tweeted an op-ed in the Globe and Mail composed by Mr. Wolfson entitled " The sky is falling on small business – or is it?" – accompanied by the laudatory statement: "Great insights by Michael Wolfson".

During the call in portion of  Alberta@Noon, a listener [Nial] phoned in to comment [and my apologies for the paraphrasing]:

"farmers work their whole life to pass down their land; kids work on the farm for little wages knowing they will receive that land eventually, and these changes will potentially increase tax on a disposition of land to children, the family farm will be "destroyed". This will result in more large scale agri-farming (Big-Ag) at the cost of the family farm."

I could have not addressed the concern about the private corporation tax proposals and its impact to family farms more eloquently myself. And to condense – putting words in Mr. Wolfson's mouth – his short response to this key question was: "Who cares – it is likely a good thing".  He did admit "that this not an area I have delved into". But ultimately, he stated the family farm is likely obsolete; that there are more effective ways to organize how Canadians grow our food. That family farms are "inefficient". Speaking like a true economist, he implied that we as a country should only be looking at the lowest cost and greatest efficiencies for food production. Period. One can easily surmise that he envisions a much expanded role by communal organizations, pension funds and government agencies growing our nation's food. I won't stoop to debate with Mr. Wolfson but I will point out that the operating efficiencies of the average Prairie farmer or rancher are likely the best in the world factoring in our climate and input costs.

Mr. Wolfson's comments triggered the small part of me that is a conspiracy theorist. There is nothing in the proposed income tax changes that will affect the preferential taxation of communal organizations or public corporations and (non-taxable) pension funds. They will have a larger competitive tax advantage to family farms corporations (not to mention larger and cheaper sources of capital), and able to use this position to continually outbid ordinary farmers and ranchers for land, quota and other scarce and finite farming inputs. Talk about the government handing over the ammunition to these entities to put a bullet straight into the heart of the family farm.

The above begs the question as to whether or not Mr. Wolfson is qualified to advise on agricultural policy. A review of Mr. Wolfson's resume states that he is an economist and computer scientist. From his University of Ottawa bio:

His [Mr. Wolfson's] numerous articles have addressed topics such as assessing the inter-generational equity of Canada's pension and health care systems, the design of an appropriate system of health statistics, modeling disease determinants and treatments, income  inequality and polarization trends, and income and income inequality as determinants of population health. 

Quick perusals of his scholarly works indicate that he has published nothing, nor is considered an expert on agri-food policy, taxation (other than statistical analysis) or succession planning. Yet this is an example of the "experts" the Finance Minister is not only listening to but congratulating in developing the most draconian changes to agricultural tax policy that have appeared in my 25 year career (let us not even speak of the revisions to the taxation of deferred grain tickets proposed in the last Budget as well).

These proposed income tax changes will negatively affect the after-tax returns for Canadian family farms (lessening their available cash flow and debt service abilities), and will exponentially increase the tax cost to pass a family farm corporation to the next generation (if you want to ensure a reasonable retirement for the parent and not just give it to the children). Renting farmland through a corporation – even to a sibling or relative – will be taxed at confiscatory rates of 70%+ if the passive asset / income proposals get passed into law as discussed in the consultation paper. The multi-generational farm will be dead in its present form, as the tax costs to sell to a child or other relative will be exponentially more than selling to an unrelated neighbor, a communal organization or a pension fund.

It will take more than just mere tweaks to the private corporation tax proposals to not adversely affect the family farm. Especially when a key Liberal policy advisor – who does not appear qualified to advise on taxation policy that will have a draconian effect on agriculture and agriculture policy – appears to admit as such.

Moodys Gartner Tax Law is only about tax. It is not an add-on service, it is our singular focus. Our Canadian and US lawyers and Chartered Accountants work together to develop effective tax strategies that get results, for individuals and corporate clients with interests in Canada, the US or both. Our strengths lie in Canadian and US cross-border tax advisory services, estateplanning, and tax litigation/dispute resolution. We identify areas of risk and opportunity, and create plans that yield the right balance of protection, optimization and compliance for each of our clients' special circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
27 Oct 2018, Seminar, London, UK

On Dec. 22, 2017, President Trump signed into law the biggest US tax reform bill in 31 years, changing the lives of Americans at home and abroad.

1 Nov 2018, Seminar, Doha, Qatar

On Dec. 22, 2017, President Trump signed into law the biggest US tax reform bill in 31 years, changing the lives of Americans at home and abroad. Many US residents will see an immediate benefit on their 2018 tax return, but for US expats and green card holders living abroad, things may have changed for the worse.

3 Nov 2018, Seminar, Dubai, United Arab Emirates

On Dec. 22, 2017, President Trump signed into law the biggest US tax reform bill in 31 years, changing the lives of Americans at home and abroad. Many US residents will see an immediate benefit on their 2018 tax return, but for US expats and green card holders living abroad, things may have changed for the worse.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions