Capital Gains Changes Update

In Budget 2024, the Federal Government proposed increasing the capital gains inclusion rate from 50% to 67%, depending on business structure. According to the Grain Growers of Canada, this change could increase succession taxes for a family – increasing the tax bill for grain farms by up to 30%. The recently released draft legislation does not include an exemption for intergeneration transfers at the original 50% inclusion rate. However, it does propose changes to the Canadian Entrepreneurial Incentive, allowing farmers (both incorporated and unincorporated) to claim $2 million in capital gains at a 33% inclusion rate, in addition to the $1.25 million lifetime capital gains exemption when selling farmland, farm partnership interest, or shares in a family farming corporation. For farmers who have fully used their lifetime capital gains exemption and the Canadian Entrepreneurial Incentive, the new policy could leave them worse off. Alberta Grains and other farm groups are actively monitoring the issue and advocating to protect family farms from these changes.

Read Alberta Grains’ press release here