Sep 15, 2017
Proposed tax changes for corporations could have negative impacts, especially when passed with little public consultation, according to policy researcher Ben LeFort with the Ontario Federation of Agriculture (OFA).
On July 18, the Department of Finance released a document outlining a number of measures designed to close what the government sees as tax loopholes. Finance Minister Bill Morneau is now planning to hold public consultation sessions on the proposed changes.
Under the current ruling, all incorporated farm businesses — which account for 25 percent of all farms in Ontario, as well as other small businesses — will be left facing additional legal and accounting fees as they try to navigate the changes.
“From a policy perspective we’re mainly worried about the impact on succession planning for family farms,” LeFort said. “This completely changes the tax planning strategy and under the proposed rules they will create a disincentive for farmers to pass on their farms to family members.”
Mark Wales, OFA director for Elgin and Oxford, said the organization is primarily concerned with three parts of the proposed legislation — changes to income splitting (income sprinkling), passive income and converting income to capital gains.
Wales said the consultation period should be extended to engage local farmers in “meaningful conversations” about the impact these decisions will have. He encouraged all OFA members to contact their local MPs to discuss how devastating these changes could be, something Elgin-Middlesex-London Conservative MP Karen Vecchio said she is fully aware of, having already had several conversations with local farmers.
“This legislation said it’s targeting the top one percent of income earners, but it’s really targeting every business — retail owners, restaurant owners, farmers, it’s affecting everyone,” Vecchio said.” Her fellow MPs are calling on the federal government to expand the consultation period, explaining 75 days of consultations during the summer is inadequate.
“Lisa Raitt, our new deputy leader, has taken the lead on this and is asking for an extension to the consultation period because we need to appropriate time to investigate this thoroughly,” Vecchio said.
The consultation period ends Monday, Oct. 2, with proposed changes slated to come into effect on Monday, Jan. 1, 2018.
LeFort said this issue is far-reaching, adding that it will hit anyone who has an incorporated business.
“If you’re incorporated, it affects you,” he said. “Seventy-five days of consultations in the middle of summer and this vague legislation, what they need to do is shelve this and come back to industries and have an actual consultation.”