Farm groups are welcoming federal budget provisions that offer long-sought-after increases in the capital gains exemption on farm sales, the manufacturing equipment depreciation allowance and trade expansion programs.
Increasing the capital gains exemption to $1 million from $813,000 has been on the Canadian Federation of Agriculture’s wish list for years. Implementing it immediately will “have a meaningful impact,” said CFA president Ron Bonnett. It should save farmers $50 billion during the next decade.
The move reflects the rising value of modern farms and will provide “greater flexibility for both the retirees and new entrants,” he added. The exemption “is an important tool for helping farmers manage the tax burden associated with the transfer of farm assets.”
The measures for agri-food sector are modest and would have made more impact if other barriers to intergenerational transfers such as the value of dairy and poultry quotas had been addressed along with investments in crop varietal development research and climate change adaptation, he said.
Gary Stanford, president of Grain Growers of Canada, was pleased to see expanded trade promotion in the budget. Combined with the increased capital gains exemption, “investments in research funding and changes in taxation could help ensure a secure future for the Canadian agriculture sector.”
CFA, GGC the Canadian Cattlemen’s Association and the Canadian Pork Council endorsed a promise to invest $18.1 million over two years to expand the Agriculture Canada’s Market Access Secretariat (MAS) along with other trade development initiatives. This includes introducing new agricultural trade commissioners abroad and taking on a more active role in setting international science-based standards.
CCA president Dave Solverson said the MAS has proven its worth since it was set up in 2009 through market access agreements and trade deals.
The budget contained a 10-year renewal of the Accelerated Capital Cost Allowance (ACCA), which Carla Ventin of Food & Consumer Products Canada called, “a win for Canadian food, beverage and consumer product manufacturers that will have a positive impact on the economy.
“The concrete, long-term extension now provides businesses with more planning certainty for larger investment projects and encourages investment in the innovative technologies required to boost productivity,” she added. “Ultimately, it’s another tool to help Canadian manufacturers grow here at home and compete for new business investments globally.”
Chris Kyte, president of Food Processors of Canada, said the continuation of the ACCA is important for food companies hoping to expand their production. “If we are to compete, continuous investment is necessary. This measure provides predictably.”
Jim Laws, Canadian Meat Council executive director, said his members appreciated the ACCA extension because it will allow companies to write off equipment faster. It enables companies to acquire processing machines that will ensure food safety.
“Ensuring food safety is priority No. 1 for Canada’s federally registered meat processors and every investment in food safety contributes to a further strengthening of this country’s world-class food safety system,” he said.
Food processing is the largest manufacturing industry in Canada, producing $92.9 billion in shipments. The ACCA would have expired at the end of this year but will now encourage Canadian food manufacturers to continue making long-term investments in machinery and equipment.
CFA also noted that the cut in the small business tax rate to nine per cent from 11 per cent “should lend support to farm businesses as well.” It also noted that greater Canadian support for establishing international science-based standards could reduce non-tariff barriers Canadian food exports face in various parts of the world. “Non-science-based standards are likely going to become a bigger issue with trade amongst developed countries.”