Untangling the tax reform puzzle

As if tax planning weren’t painful enough for poultry producers… Over the past year, the federal government has made things even more confusing – and drawn the ire of farmers in the process. Last summer, the feds unveiled controversial small business tax reforms.

The idea was to make the system fairer by closing “tax loopholes” being used by “wealthy Canadians”.

But the planned changes, particularly the proposal to restrict access to the lifetime capital gains exemption (LCGE), would’ve made it much more difficult for poultry producers to transfer the family farm to their children. In brief, farmers use the tool to shelter up to $1 million of capitals gains from income tax when they sell certain types of farms.

The Liberals’ original plan would’ve prevented “non-active” family members from accessing their full tax exemption, thus incurring a significant tax cost. One poultry farmer told me the changes as originally proposed would have made it almost impossible to pass his farm on to his children. “We would’ve been better off selling our farm to a complete stranger,” he lamented.

But only a few months after the original announcement, largely in response to a loud backlash from farmers, the Liberals dropped their capital gains tax plan, modified other proposals like income splitting and introduced entirely new changes.

BDO Canada’s Jesse Moore, who consults agribusinesses on taxation and who spoke at a Poultry Industry Council event on the government’s proposals, says many producers are now understandably confused as to the current state of reforms. “I think people understand there have been some changes, but trying to track what was originally proposed, what was dropped and what’s still in place has caused some confusion,” he says.

That being the case, we’ve tapped Moore to give you a clearer picture of where things stand, how we got here and what it all means to your poultry business. Check out his online-exclusive update, The evolution of tax changes for the Canadian farm business.

In brief, Moore says that while dropping the LCGE restriction was a big win for farmers, we’re now in a different world when it comes to income splitting. “Poultry farmers have to pay attention to their remuneration strategy,” he says. “And some might have to restructure things.”

What else is new
In addition to online-exclusive content like Moore’s analysis, there are plenty other exciting things happening at Canadian Poultry magazine. Take, for example, Disease Watch. One of the things you told us you wanted more of in our recently completed reader survey is greater coverage of outbreaks.

That’s why we recently launched Disease Watch. Found under the Health channel on the website, our new section includes frequent updates on poultry health-related incidents in Canada and across the globe.

We also welcome a new contributor this issue. Ben Kaiser is a master gasfitter and plumber. He works with his father Martin and his three brothers at Kaiser Ag, an agricultural equipment and consulting firm based in Wetaskiwin, Alta. Kaiser is the company’s poultry barn construction and installation specialist.

In his new column Better Barns, Kaiser will share the wealth of expertise he’s acquired over the years with you.

In short, his focus will be on helping producers squeeze that extra 0.5 per cent out of their barn. Kaiser says he’s thrilled for the opportunity to help you succeed. “We all win when ideas are shared.”