The province's largest general farm lobby organization, the Ontario Federation of Agriculture (OFA) released a commentary piece recently discussing the proposed changes to federal taxation and how this will impact farm corporations written by Mark Wales, director, OFA.
OFA estimates that about 25 per cent of farm businesses in Ontario and Canada are incorporated. Proposed changed released by the Department of Finance on July 18th would overhaul the private cooperation tax system.
"As part of the changes, any farmer who has incorporated their business would need to review their succession and tax plan with an advisor to ensure they make sense under the proposed changes. The tax implications of not being in compliance with the new rules could be severe," said Wales.
The changes would also penalize farmers who want to pass on their incorporated farm business to the next generation. "It is completely unacceptable that legislative changes would make it easier and lower the tax bill for a farmer to sell their farm business share to a stranger, rather than their own child or grandchild," he said.
The proposed changes, slated to go into effect on January 1, 2018. The consultation period is open until October 2. OFA encourages concerned farmers to contact their MP.