On March 27, federal Agriculture Minister Heath MacDonald announced that the government will propose amendments to the Income Tax Act to extend the income tax deferral period for livestock producers in Alberta, Saskatchewan and Manitoba.

Eligible producers received compensation for their animals to be destroyed due to bovine tuberculosis in 2024 and 2025.

This action is a response to concerns from livestock producers about the challenges of replenishing their herds during the same tax year that they received compensation.

Under the Health of Animals Act, the Canadian Food Inspection Agency provided compensation to livestock producers whose animals were destroyed in 2024 and 2025 due to the bovine TB outbreak.

A section of the Income Tax Act allows for only a one-year deferral, but the proposed amendments will allow livestock producers to defer compensation for a prescribed schedule from 2026 to 2030, enabling them to have greater flexibility to manage their incomes and sustain their operations as they rebuild their herds.

Producers who received amounts as compensation in 2025 or 2026 under the Health of Animals Act because they had to destroy their animals due to tuberculosis outbreaks will have the option of including those amounts in income for tax purposes as follows:

• Up to 100 per cent of the compensation deferred to the 2027 tax year, with at least 83 per cent included in income in 2027.
• Up to 17 per cent of the compensation deferred to the 2028 tax year, with at least nine per cent included in income in 2028.
• Up to eight per cent of the compensation deferred to the 2029 tax year, with at least four per cent included in income in 2029.
• Up to four per cent of the compensation deferred to the 2030 tax year, with the remaining four per cent included in income in 2030.

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From April, the threshold for individual inheritance tax relief will rise to 2.5 million pounds (C$4.62 million) from 1 million pounds, significantly reducing the number of farms and agricultural business owners facing higher tax bills, the government said.

“We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms,” Environment Secretary Emma Reynolds said in a statement.

“It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities,” she said.

Tom Bradshaw, president of the National Farmers Union, said the original proposals represented a “pernicious and cruel tax” that his organization had fought for 14 months.

“I am thankful common sense has prevailed and government has listened,” Bradshaw said. “From the start the government said it was trying to protect the family farm and the change announced today brings this much closer to reality for many.”

Tractor protests in London

The move represents the latest policy reversal by Prime Minister Keir Starmer’s government. In July, it backed down on plans to cut welfare spending, and in June it scaled back a proposal to reduce subsidies on energy bills for the elderly.

Under the revised rules, 100 per cent relief will apply up to the new 2.5 million pounds threshold, with 50 per cent relief on assets above the new level. Spouses or civil partners will be able to pass on up to 5 million pounds’ worth of farm assets between them, the statement said.

The government estimated that around 85 per cent of estates claiming agricultural property relief in the 2026/27 year, including those that also claim for business property relief, will pay no more inheritance tax as a result of the changes.

The original announcement in 2024, which ended an exemption from inheritance tax for agricultural families from next year, triggered protests in London by tractor-driving farmers that have continued regularly.

The government had said the measure was intended to raise revenue to help pay for strained public services. Farmers warned it would destroy family farms and cut food production.

The post U.K. softens stance on farm tax after months of protests appeared first on Country Guide.

No one does really, but farmers seem to have a particular disdain for sending money to Ottawa.

I think there are a few reasons for this.

One is cash basis income tax treatment which means farmers can often defer paying income tax. Farmers can benefit from deferring income tax, although I would argue it’s more of a necessity than a benefit.

The only alternative would be taxing the farmer on his or her production inventory before it’s sold, estimating production and a selling price.

Other business owners and professionals are taxed on their receivables, but for farmers, the inventory is often not yet contracted or sold.

There are two main strategies to defer income taxes. One is to pre-buy next year’s input expenses; the other is to defer grain ticket settlements to the next fiscal year. In the 2017 budget the Liberal government considered changes to the Canadian grain ticket income tax deferral rules. I responded to the government consultation that grain ticket deferral doesn’t cost government anything directly and I argued taking it away would only further increase farm support payments.

Fortunately, the rules remained unchanged.

There are two ways to record income taxes on accrual financial statements. One is the taxes payable method which is just as it sounds: simply report income taxes owing as a payable.

The other method is the future income taxes method. This method recognizes the future taxes owing on your unsold inventory and, in some cases, the difference between accounting net book value and tax net book value of assets such as farm machinery.

I prefer the income taxes payable method for its simplicity. I find the future income taxes method only relevant if operations were to wind down next year — which almost never happens.

Another reason farmers don’t like paying taxes is perceived government waste. Farmers work hard for their profits and like everyone, want to see good return for their tax dollars.

Most of my working career I’ve been a T4 income earning employee. Taxes withheld since my first pay cheque never hit my bank account. If you never see the money, it’s harder to envision it as your own.

Then I started my fractional CFO firm where I source and execute the work, pay the bills and have to send a chunk of profit away in taxes. It’s a different mindset when the money physically hits your bank account and then you have to send a large portion away each quarter.

The same is true for farm business owners who must acquire land and livestock, purchase supplies and inputs and then execute on a farm business plan. Hopefully, weather cooperates and they’re able to squeak out a profit. And then, hopefully, politicians put their taxes paid to good use.

One advantage Canada has over the U.S. is the absence of personal property taxes on farm machinery. (Although significant exemptions exist.) Some states, such as Montana, levy a tax for the value of farm machinery on hand at the end of every year.

Canadian farmers also benefit from a tax-free rollover of farms to the next generation and may it always remain this way. Any introduction of a wealth or estate transfer tax would be as popular as last year’s attempted capital gains tax increase.

So, between start-up years, money-losing years and deferring tax, farmers aren’t used to paying taxes. Many farm accountants tell their clients they should want to pay income taxes, because it means that the farm has been profitable long enough to exhaust the usual tax deferral strategies.

Just remember that farmers will never like it.

Craig Macfie, CPA, PAg, provides fractional CFO services to growing farms and agribusinesses. Find out more at springcfo.com

The post Why do farmers hate paying taxes? appeared first on Country Guide.

As incorporated farmers make more sophisticated strategic plans, many are adding more than one corporation to their family portfolio. Alongside farm operating corporations, several farm businesses have added landholding corporations to the mix — creating new companies to hold the land farmed by their operating corporation.

This practice is common across the country and used by all types of farmers.

If you’re farming with just one corporation, are you missing a tax trick?

In Edmonton, Stuart Person, a farm tax expert and national leader of MNP’s crop services, says his firm recommends landholding companies to several of their farm clients, for a variety of reasons.

On the east coast, too, tax planning specialist Jennifer Dunn in Charlottetown works with a lot of BDO Canada farm clients taking such steps.

Adding a landholding corporation isn’t the right structure for every farm operation, so before you make a decision for your farm, do consult tax and business experts. But having the right corporate structure in place can reduce taxes and add other business benefits.

If you’re in one of the following situations, it might be wise for you too.

Paying for new land

It’s harder to pay for land than it used to be. Even farmers who might once have been able to buy land with the cash in their savings accounts likely need a loan to buy land at current prices. The reason high land prices can drive demand for landholding companies is that, as Person says, “in order to pay for that land, you have to have after-tax money to make the principal payments.”

• RELATED: Implementing change on farms that works
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Canadian small business taxes are significantly lower than personal income taxes. With a federal small business tax rate of 9 per cent, and provincial rates ranging from zero (Manitoba) to 3.2 per cent (Ontario and Quebec), the total tax rate for a Canadian small business (with $500,000 or less of business income) is between nine and 12.2 per cent.

Personal taxes vary from province to province and depend on your tax bracket, but marginal rates range from 20.05 per cent (the lowest combined federal and provincial rate, in Ontario) to 53.53 (the highest combined rate, in Ontario and Quebec). In almost every province and tax bracket, personal taxes are more than twice as high as small business taxes.

Higher rates mean you need much higher after-tax income to make land payments. Someone earning $100,000 in Saskatchewan, with a 33 per cent marginal tax rate, needs an extra $29,851 in income to make a $20,000 land payment (that’s $20,000 for the payment, plus $9,851 for the increased taxes). A Saskatchewan farm company paying 10 per cent tax only needs an extra $22,222 to make the same payment ($20,000 for the payment and $2,222 for the additional tax).

Rental income earned in a landholding corporation can be used to make after-tax land payments in a landholding corporation.

Planning for the future

Many established farmers want to develop succession plans that will allow one or two of their kids to keep farming while non-farming kids also inherit some financial assets. Unfortunately, not all farmers own significant financial assets outside of their farming corporation.

Leaving shares in the farm operating company to kids who live off farm can create conflict in the next generation. How involved will the non-farming kids be? Will they have decision-making ability? If the non-farming kids want a cash payout, can the farm survive?

Holding some or all of the family farmland in a landholding company, rather than in the farm operating company, provides a lower-conflict solution.

“It’s a way to keep all the land together,” Person says.

With a landholding company in place, farming children can inherit the farm operating company, and non-farming children (and farming children, as the parents wish) can inherit shares in a landholding company. This provides non-farming children with a share of the family assets. When the farm operating company pays rent to the landholding company, shareholders can receive dividends.

Instead of owning specific pieces of land, the siblings will own shares in the company. This can make it more difficult for non-farming children to sell their share of the farmland. With the right corporate setup, Person says, “you need all the kids to agree to sell the land, so that the brother or sister who is farming can keep farming.”

Using a landholding company as part of a succession plan can help to keep the farm operating while still offering non-farming children a long-term income stream. “You’ve gifted an asset to your children that they really cannot turn into cash,” Person says. However, the non-farming child will receive regular dividends, and potentially sell their shares in the land company to the farming child or another sibling.

Planning even further into the future

Maybe your farm’s future looks secure, with two or three of the children who grew up on the farm planning to run the business together.

Even where relations and business plans appear to be strong, creating a holding company for all or some of the farmland may be a good idea. First, “it avoids the siblings having to split up the farm company at a later date, which can become very complex and expensive,” Dunn says.

And even if these siblings farm well together for decades, “those children, they will have children,” Dunn points out. It might be more difficult for cousins to farm together than siblings. And there may be more non-farming kids in future generations. Setting up a future that will allow for more flexibility can give the next generation more room to make their own creative succession plans.

Protecting farm assets

Nobody wants to think about a worst-case scenario, but accidents happen, and sometimes farmers wind up on the wrong side of legal decisions. Legal settlements can be expensive. In some cases, holding land in a corporation that is separate from the farm operating corporation may keep land from becoming part of a settlement.

A landholding corporation doesn’t guarantee that land can be kept out of a lawsuit, but it might help. “It adds another layer of creditor protection, reducing the exposure risk on the land assets,” Person says.

Dunn has seen a lot of farmers in Prince Edward Island use this strategy. Many potato farmers also run trucking businesses, she says. “They’ll incorporate that trucking business separately for liability reasons. It’s about being proactive and thinking about what could happen.”

Reducing taxes on land sales

Maybe your great-granddaughter won’t want to farm. Or maybe you own a quarter section of land that’s really inconvenient to get to, and you think you might want to sell it someday.

It can be more difficult to sell small parcels of land that are owned by a farm operating company.

First, there’s the tax issue. Since changes in the 2024 federal budget took effect, corporations are taxed on two-thirds of the capital gain from the sale of assets (up from 50 per cent before the change). If the farm shareholders want to access some of the land from that sale for non-farm use, they’ll pay taxes on the money coming out of the company (typically through dividends or salary).

If the land that is sold is held by a landholding corporation, the owners of the corporation can sell their shares to the land buyer. The shares will have increased in value if the price of the land has increased since incorporation, but individuals can use their Lifetime Capital Gains Exemption to lower their tax bill. In the 2024 federal budget, this exemption increased to $1.25 million for owners of qualified farm property.

Making land sales more flexible

If you’re winding down a farm, and your farmland is held by an operating company, it may be more difficult to sell. “Most of the time,” Person says, “buyers just want to buy the land. If you have that land in a separate company, you can turn around and sell that company to the buyer.”

Dunn points out that if buyers aren’t interested in legal or administrative hassles, they may offer a lower price for land held by an operating company.

This logic can also apply to just one piece of land. Person says he often sees farmers creating new companies just to hold small land parcels they might want to sell off one day. “They’ll set up a whole new company just to hold one quarter of land.”

One of Person’s clients, he says, owns land near an urban centre, and may one day want to sell to developers. This farmer has several separate landholding companies, each holding small pieces of land. This structure would make it very simple for the owner to sell off one piece at a time.

What if it’s already mine?

Maybe you already own land personally — that is, you own farmland in your name rather than in the name of your farm corporation. If the land is paid for, the issues around raising after-tax dollars to make mortgage payments don’t apply for you. You can sell this land without worrying about shares, and still take advantage of your personal Lifetime Capital Gains Exemption. You may be receiving rent payments as income and using some of that income to pay the property taxes. As an individual, you’ll be paying higher tax rates, but you also have the cash in hand to use as you please.

In this case, there would be minimal benefits to creating a landholding corporation. You would have the costs and hassle of setting up the corporation, but limited benefits.

One potential reason to do this, if you’re very pessimistic and your land has increased substantially in value, might be to take the opportunity to use up some of your Lifetime Capital Gains Exemption now, in case you expect changes in the future that might increase your taxes. If you’re thinking of transferring land into a corporation, “Understand any HST or land transfer tax issues that may arise with the transfer of land,” Dunn says.

It’s not all upside

There are some downsides associated with adding corporations to your filing cabinet. Of course, Dunn says, “there’s the additional administrative cost and complexity of setting up and maintaining several corporations.”

There’s also the Lifetime Capital Gains Exemption. Only individuals have access to that tax break ­— not companies. If land held by a company is sold, that company is going to be paying capital gains tax on the sale.

And here’s a note about renting out land that is held by a corporation. Rental income from renting to a third party (someone not directly related to you) will be taxed as “passive” income (versus active farming income), which is taxed at a much higher rate than the small business tax rate.

Don’t let taxes rule your life

Taxes are not always the most important factor when you’re making business decisions. And always keep in mind that even the best tax professionals are always going to be focused on… well… taxes.

“We have to look at tax holistically, so it’s not always the tax tail wagging the dog,” Dunn says. “Oftentimes as a tax professional I’m looking at a transaction solely from a tax perspective. However, I can’t lose sight of the family’s overall goals.”

Sometimes, she adds, the best tax recommendations are not the best fit for a family situation. Dunn has a timely example of this. “I was advising a farm family prior to the change in the capital gains inclusion rate rule.” This is the change that increased the share of capital gains over $250,000 that individuals pay tax on from 50 percent to 66.67 percent after June 25, 2024.

“It would’ve been to their advantage to enter into a transaction with their grandson prior to the change,” Dunn says. As a professional who enjoys helping her clients lower their tax bill, Dunn still sounds a little disappointed when she explains that the grandparents just weren’t emotionally ready to hand over more assets to their grandson, even though it meant higher taxes later.

“I tried to convince them,” she says. But in the end, they decided to wait. “I had to respect that,” she says.

Tax experts might be hyper-focused on tax, but, please, consult them if you’re thinking of making changes to your farm structure.

This is definitely an area where spending a few thousand dollars to get good advice up front can be a money saver in the end.

Missteps can result in increased tax bills of thousands of dollars, if not millions. And only professionals with training and experience, like Person and Dunn, can clearly navigate the CRA’s maze of farm tax rules around terms like “qualifying farm property,” “actively farming,” or “passive income.”

Person enjoys helping farmers understand how these complicated tax details can have an impact on their profitability. “That’s why I focused on the ag niche,” he says. “It’s so specialized, it has its own section of the ITA!” (that’s The Income Tax Act, for those of us who don’t live and breathe this stuff.)

Dunn also loves the complexity of the topic, because it enables her to help her farm clients pay the least amount of tax possible. And not just because, as she says, “It keeps me in business.”

The post How a second farm corporation may help you at tax time appeared first on Country Guide.

“Our research shows that an average grain farm in Canada, most of which are family owned and operated, will see a tax increase of 30 per cent due to the two-thirds capital gains inclusion rate,” said Kyle Larkin, Executive Director of GGC in a news release, adding “this hike targets farmers’ retirement plans, complicates intergenerational transfers, and threatens the long-term viability of family farms across the country.”

The 2024 federal budget proposed several key changes to the way capital gains are taxed in Canada:

• After June 25, 2024, any capital gains up to C$250,000 remain subject to the normal 50 per cent inclusion rate, however, gains above C$250,000 will be subject to a new 66.67 per cent inclusion rate for individuals.
• All capital gains generated through a corporation will be subject to a 66.67 per cent inclusion rate.
• The lifetime capital gains exemption for eligible property increases from $1,016,836 to $1,250,000.

Since many family-run grain farms are structured as corporations, family members can become shareholders in the corporation. During the sale of a farm, shareholders can each use their lifetime capital gains exemption upon the sale of their shares. While the combination of two lifetime capital gain exemptions would help reduce the taxes owing by each individual, ultimately the proposed changes will still result in a substantial increase in taxes, according to the GGC research.

In examples provided by the GGC, an 800-acre farm purchased in 1996 in Ontario would incur nearly C$1.2 million in additional taxes if sold today, while a 4,000-acre farm in Saskatchewan would face an increase of just over C$900,000.

“With over 40 per cent of farmers nearing retirement over the next decade, this tax increase introduces substantial uncertainty into their retirement planning,” said Andre Harpe, GGC Chair and Alberta grain farmer in the release. “Despite Budget 2024’s title of ‘Fairness for Every Generation,’ this change will actually burden the next generation of farmers, who are already grappling with costly transfers.”

With the higher taxes leading to increased costs for transferring a farm to the next generation, “this puts the family farm at risk, as the only ones that will be able to afford to pay millions of extra dollars will either be corporate farms or development companies,” said Larkin.

Already, Canada is experiencing a decline in family-owned farms, with a two per cent decrease between 2016 and 2021, according to the most recent data from Statistics Canada.

“To protect family farms, we are asking the government to exempt intergenerational transfers and allow them to be taxed at the original capital gains inclusion rate,” said Larkin. “This will ensure that farmers’ retirement plans remain secure and that the next generation can afford to take over, enabling family farms to continue being the backbone of Canada’s agriculture sector.”

With 40 per cent of Canadian farm operators set to retire over the next decade, “we need to ensure that the proposed personal income tax measures announced in Budget 2024 do not jeopardize the transfer of assets from one generation of farmer to another, but rather encourage the next generation of farmers to take up the calling, drive much needed rural economic activity and help the agriculture sector reach its growth potential,” said the Canadian Federation of Agriculture in a separate news release.

“By ramming these very significant tax changes through while farmers are in the field planting, we aren’t giving producers enough time to fully assess the implications for their families and their businesses,” said Keith Currie, CFA President.

*Update: A comment from the Canadian Federation of Agriculture was added.

The post Family farms at risk from higher capital gains rates: GGC appeared first on Country Guide.

The controversial abolition of tax breaks and diesel subsidies for farmers will not happen in one swoop, the spokesperson said.

Instead, tax concessions for agricultural diesel will be reduced by 40 per cent this year, then by 30 per cent in 2025 and a complete end to the subsidy from 2026.

The planned abolition of the tax break prompted hundreds of German farmers to protest in central Berlin last month.

German Chancellor Olaf Scholz’s three-party coalition announced in December an agreement on the key points of the draft budget for 2024 following weeks of negotiations.

The agreed changes to the 2024 draft budget announced on Thursday, which also impact a plastic levy and funds for the national railway, will result in 2.5 billion euros (CAD $3.66 billion) less in savings than initially anticipated, said the government spokesperson.

–Reporting for Reuters by Maria Martinez.

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After a constitutional court ruling last month that cancelled 60 billion euros of earmarked debt, the federal government last week announced plans to save around 900 million euros ($983.34 million USD) annually in subsidies for farmers.

According to next year’s budget, a partial tax refund on agricultural diesel, along with a tax exemption for agricultural vehicles, will be abolished to meet the saving targets – a measure farmers said would threaten their livelihood and the competitiveness of Germany’s agricultural sector.

Farmers protested the planned cuts at the Brandenburg Gate, carrying placards reading “YOUR POLITICS ARE A DECLARATION OF WAR AGAINST FARMERS” and “TOO MUCH IS TOO MUCH! IT’S OVER NOW!” parking a number of tractors along Berlin’s Strasse des 17. Juni boulevard in central Berlin.

Germany’s DBV and LSV farmers lobbies called for the protest last week and on Monday threatened to organise further country-wide demonstrations if the measures were implemented.

“Then from January 8th we will be present everywhere in a way that the country has never experienced before. We will not accept this,” DBV President Joachim Rukwied said.

The cuts, agreed by the ruling coalition leaders of the Social Democrats, Greens and Free Democrats, could cause dispute not just within the coalition, now opposed by FDP liberals, but also within the Greens party itself, as Greens Agriculture Minister Cem Ozdemir joined the farmers in Monday’s protest.

“I will do everything in my power so that this won’t happen this way, ladies and gentlemen,” Ozdemir said.

Additional burden

Farmer Jule Bonsels from the western Rhineland region said the tax break cancellation meant an additional financial burden of some 20,000 euros per year.

“I personally find this unacceptable. We must give young people prospects, and these plans totally kill it,” she added.

Government spokesperson Steffen Hebestreit on Monday said decisions on the 2024 budget were in place and won’t be reopened, adding that the details of implementation were still being examined.

The cuts also aim to help reduce greenhouse emissions in the country’s agriculture sector that was responsible for 55.5 million metric tonnes of greenhouse emissions last year, roughly 7.4 per cent of the country’s total.

Environmental groups said farmers could bear the financial burden of the cancelled subsidies, citing profits made from rising food prices and other agricultural subsidies that are still in place.

“With all understanding for the farmers – making agricultural diesel cheaper by the state is expensive, harmful to the climate and should be abolished,” Greenpeace agricultural expert Martin Hofstetter said in a statement on Monday.

Erwin Decker, a wine farmer in Germany’s Black Forest region, said implementing the planned cuts would force many family-run farms to close across the country.

“What are we supposed to do? The land is there. It has to be harvested and if it turns into a jungle, no one gains anything,” Decker said.

The post German farmers protest with tractors against austerity measures appeared first on Country Guide.

The federal finance department on Nov. 16 posted its legislative and regulatory proposals for changes to the UHT online and has teed up a consultation period for those proposals. Canadians and other stakeholders and organizations are asked to submit comment via email by Jan. 3, 2024.

The UHT — an annual, one per cent tax on ownership of vacant or “underused” housing in Canada which took effect Jan. 1 last year — has led a clutch of national farm groups to call on Ottawa for a blanket exemption for farmers from having to file a UHT return.

Canadian citizens and permanent residents are exempt from the UHT, but many corporations are not. That means a farm operating via a Canadian corporation or partnership with a residential property is required to file a UHT return each year, even if other exemptions mean no UHT will be owed.

Furthermore, the farm groups said, while some forms of farm worker housing, such as a bunkhouse or mobile home, are exempt, a detached house used for worker housing is not. That rule, they said, amounts to a penalty on higher-quality housing options for farm workers.

Freeland’s proposal would see certain types of corporations and partnerships added to the list of “excluded owners” for the purpose of UHT reporting — which means those entities “would no longer have UHT reporting obligations.”

The proposal would exclude:

• a “specified Canadian corporation” — that is, a Canadian corporation in which foreign individuals/corporations hold less than 10 per cent of votes or equity;
• any partner of a “specified Canadian partnership” — generally, a partnership whose partners are exclusively “Canadian”; and/or
• any trustee of a “specified Canadian trust” — generally, a trust whose beneficiaries are exclusively “Canadian.”

Freeland’s proposal would also set up a new UHT exemption for “residential properties held as a place of residence or lodging for employees.”

That new exemption would cover residential properties anywhere in Canada, except those in a census metropolitan area or “a census agglomeration having 30,000 or more residents.”

Those changes are expected to apply for the 2023 calendar year and subsequent years, the government said.

Not retroactive

Federal Revenue Minister Marie-Claude Bibeau tweeted Wednesday on X that the fall economic statement “addresses major irritants” of the UHT, particularly by broadening its definition of “excluded owner.”

That move will “eliminate the need to file (UHT) returns for many Canadian businesses, such as agricultural businesses,” said Bibeau, a former federal agriculture minister.

However, she noted in response to other X users’ replies on Wednesday, the changes will not be retroactive to the 2022 tax year.

UHT filers have been granted two “transitional” extensions to file for the 2022 tax year without penalty. The first, announced in late March, extended the deadline to Oct. 31; then, on Oct. 31, another extension was granted, giving UHT filers until April 30, 2024 to file their 2022 UHT returns.

However, the government said, UHT returns for the 2023 calendar year will also need to be filed by the normal deadline of April 30, 2024, to avoid penalties and interest.

That said, Freeland’s proposed changes to UHT rules also call for reduced penalties for those who fail to file UHT returns by the annual deadline — and would make those reductions retroactive to the 2022 tax year.

Those penalties — now $5,000 per failure for individuals, and $10,000 per failure for corporations — would be cut to $1,000 and $2,000 respectively. — Glacier FarmMedia Network

The post Feds plan to ease Underused Housing Tax reporting load appeared first on Country Guide.

“We urge the government to exempt farmers from the requirement to file a [underused housing tax] return,” said a letter sent to federal ministers.

The Canadian Canola Growers, Canadian Federation of Agriculture, Canadian Cattle Association, Ontario Fruit and Vegetable Growers, National Cattle Feeders, and Fruit and Vegetable Growers of Canada signed the letter, sent to ministers Lawrence MacAulay, Marie-Claude Bibeau and Chrystia Freeland on Aug. 16.

The underused housing tax (UHT) is an annual, one per cent tax on ownership of vacant or “underused” housing in Canada, the Government of Canada’s website says. It took effect at the beginning of 2022.

“The intent is to impose an annual one per cent tax on vacant or underused housing in Canada that’s owned directly or indirectly by persons who are not Canadian citizens or permanent residents,” said Kurt Oelschlagel, BDO partner and national agriculture tax leader, in an April report in Farmtario.

However, while Canadian citizens and permanent residents are exempt from the tax, many corporations are not.

“If you operate your farm through a Canadian corporation or partnership and it owns a residential property, you will be required to file a UHT return, even if no UHT is owed due to applicable exemptions,” Oelschlagel said. “Non-filing can result in substantial financial penalties.”

In the letter, the groups said that the UHT filing requirement is having a negative impact on farmers because many own multiple homes because they bought, leased or inherited farmland with a house on it, or because they house temporary foreign workers.

Bunkhouses and mobile homes, often used to house workers, are exempt however many accommodations still require filing, the letter said.

“Many farm employers have been moving towards higher quality housing for their foreign employees such as detached houses,” it added. Since UHT filing is required for these, it effectively penalizes higher-quality housing for workers, the groups said.

“While we recognize this tax provides an exemption process for which farmers can apply, the professional fees (i.e., accountants) to complete the exemption application can be significant and are simply one more burden upon farmers who are already facing increasing input costs, energy costs and regulatory requirements,” the groups said.

In the letter, the ag groups asked the federal government to exempt farmers from the requirement to file a UHT return without requiring them to apply for this exclusion.

The post Underused housing tax undue burden on farmers, ag groups say appeared first on Country Guide.

PSAC president Chris Aylward said he was “setting a clock on this round of bargaining” and that a strike would be called if there is no deal by 9 p.m. ET on Tuesday.

The strike would affect federal services and could delay tax refunds since about 35,000 workers at the revenue agency would walk out in the middle of tax filing season. Passport renewals ahead of summer travel could also be delayed.

“Despite some progress at the bargaining table, our members are frustrated that while negotiations drag on, they continue to fall behind,” Aylward told reporters. “We’ve always said from day one, we need wages for our members that will keep up with inflation.”

PSAC has been in collective bargaining for a new contract since 2021. Tax agency workers initially sought a pay bump of more than 30 per cent over three years, and others are asking for 13.5 per cent over three years. Inflation peaked at 8.1 per cent last year.

Aylward said the offers received so far had fallen short. Prime Minister Justin Trudeau said he was hopeful a deal would be reached to avert a strike.

“There have been constructive advances and offers and we’re very hopeful that we’re going to be able to resolve this, but it’s at the bargaining table that these things happen and we will continue to do that be there in good faith and work on trying to resolve this for all Canadians,” Trudeau told reporters.

The strike would also affect 65 per cent of employees at the Canadian Grain Commission, including most inspectors of outbound grain at ports, according to the commission. Canada is a major wheat and canola exporter.

The commission is working on contingency plans with grain companies to ensure that “critical grain exports can continue,” during a strike, spokesperson Remi Gosselin said.

— Reporting for Reuters by Steve Scherer in Ottawa; additional reporting by Rod Nickel in Winnipeg.

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