Evidence of meeting #116 for Agriculture and Agri-Food in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was farm.
A recording is available from Parliament.
Executive Director, Canadian Federation of Agriculture
We could certainly pull some numbers together with that, but there's not really a one-size-fits-all answer to it. I would say it's more often categorized across the amount of gross revenue they're generating on an annual basis.
Liberal
Bobby Morrissey Liberal Egmont, PE
Okay, so you do not know the asset level of each category of farm.
Executive Director, Canadian Federation of Agriculture
There are different definitions. I would typically suggest that the numbers that Mr. Larkin referenced around something under $250,000 in gross annual revenue would typically be considered a very small operation. Then, when you get over $500,000 to about a $1 million or $2 million, you're in the middle sizes and then upwards from there.
Liberal
Bobby Morrissey Liberal Egmont, PE
Okay, but you do not have it by commodity. It would be, I expect, easy on a dairy farm to categorize that.
Executive Director, Canadian Federation of Agriculture
There are different definitions of this as well, but I can certainly bring those numbers to the committee's attention.
Liberal
Bobby Morrissey Liberal Egmont, PE
I would ask you to do that by various commodities and various impacts for the benefit of the committee and those outside the farm community who often do not fully appreciate the contribution from the farm community on that asset side.
On the net profit of a farm, like any other business, what's the marginal tax rate today, Mr. Larkin or Mr. Ross? You said you had a financial analysis done to back up the comments you made to this committee. What is the tax rate?
Executive Director, Grain Growers of Canada
I can't speak to the marginal tax rates because we've only done research on the capital gains tax rate, which takes effect during succession planning and the transfer, that intergenerational transfer—
Liberal
Executive Director, Grain Growers of Canada
I don't have that number with me, but I can table it afterward.
Liberal
Bobby Morrissey Liberal Egmont, PE
For the net profit from any business, including a farm, what's the tax rate you pay on that?
Executive Director, Grain Growers of Canada
I can't speak exactly to net profit because, as Mr. Ross was saying, every year is different and every farm is different.
October 31st, 2024 / 8:40 a.m.
Liberal
Liberal
Bobby Morrissey Liberal Egmont, PE
That's fair.
I would like to know what analysis you've done, because the marginal tax rate on small business in general has come down, I believe, by about 18% over the past number of years.
Mr. Ross, do you have information on that?
Executive Director, Canadian Federation of Agriculture
I think the challenge is what Mr. Larkin spoke to. The concern about the capital gains is just at that moment of succession, where there is that more significant capital gain. It does vary significantly by farm size.
Liberal
Bobby Morrissey Liberal Egmont, PE
On a small farm, there was actually more of a shelter. Is that correct?
For the record, it went from $1 million to $1.25 million.
Executive Director, Canadian Federation of Agriculture
Our assessment is that with a smaller size of operation, there is a—
Liberal
Bobby Morrissey Liberal Egmont, PE
That's within each shareholder within the farm, so if there are multiple partners, you could multiply that $1.25 million. Is that correct?
You've said you've done the analysis—
Executive Director, Canadian Federation of Agriculture
The assessments we've seen to this effect.... We didn't reference that we've done an analysis, but I do agree that we have looked at it. The assessment we've seen is that, once you get over around $6.25 million, that is where the cost starts to increase dramatically for farms.
One of the important points to make is that people often—
Liberal
Bobby Morrissey Liberal Egmont, PE
To clarify then, the impact is felt at the sale of an asset of $6.25 million.
Executive Director, Canadian Federation of Agriculture
Yes. The numbers I'm referencing are coming—
Liberal
Bobby Morrissey Liberal Egmont, PE
What would be the tax impact difference on the sale of a $6.25-million asset?
Executive Director, Canadian Federation of Agriculture
I would have to look at that. A number of individual variables will affect this, to the point of your comment about what the shareholder structure is—
Liberal
Bobby Morrissey Liberal Egmont, PE
I realize that, but the accountants will structure to maximize the benefit and minimize the tax gain, as well they should. Everybody who operates a particular business has the right to do that.
I'm familiar...and I have met extensively with farmers in my community on this issue, as well as every other issue. There were farmers who expressed a concern to me about the amount of movement. Could you explain a bit more? A lot of people do not understand the intergenerational transfer size. That's an issue that comes up from time to time.
That's for Mr. Ross or Mr. Larkin—whoever feels comfortable on that.
We don't have much time left.
Executive Director, Canadian Federation of Agriculture
I'm not sure I understand the question.