When Finance Minister Bill Morneau announced proposed tax changes in July, he said he expected some push-back, but it’s clear the Liberals did not expect the shove to be quite this forceful.
The Liberals say they’re open to tweaks based on what they’ve heard during the 75-day consultation period, but they’ve been vague on which areas might be changed when that period ends Monday.
“We’ve heard some concerns that we agree with and some concerns that we don’t agree,” Prime Minister Justin Trudeau said earlier this week.
But in an appearance at the House of Commons finance committee Thursday, Morneau revealed, to some extent, which voices have been heard above the fray: farmers.
“Nothing in what we’re proposing is intended to change the ability of a family member work on the farm, nothing is intended to in any way limit the farmer’s ability to save for that investment…and nothing is intended for it to make it more difficult for the farmer to pass the farm to the next generation,” said Morneau.
Here are four possible tweaks experts say finance officials could consider, to help farmers and other small business owners.
1. Exempt intergenerational business transfers
One of the proposals is designed to stop private corporations from converting corporate income, which would be taxed at a higher rate, to capital gains, which is taxed at a lower rate.
While some use this vehicle to game the system, there are those who use this mechanism to sell all or part of the family business to their children — for example, to keep a farm in the family. The new rules would increase their tax rate from 25 per cent to between 40 and 45 per cent.
“Canadian families can’t afford the tax bill to sell to their children if…