- The Canadian Federation of Agriculture (CFA) was pleased to see investments in agricultural trade promotion, a continued commitment to improve labour access and market information, and a reduction in cost of Employment Insurance (EI) premiums for business owners reflected in the Federal Budget tabled today.
"One of the most significant items for agriculture in this budget is the increase to the Lifetime Capital Gains, which CFA has been advocating for some time. Last year's budget saw a small increase in this area, but the funds allocated this year will have a more meaningful impact," said CFA President Ron Bonnett.
The Lifetime Capital Gains exemption is an important tool for helping farmers manage the tax burden associated with the transfer of farm assets. The CFA is pleased the increase to $1 million is effective immediately, as it will assist farmers in their transfer of assets to the next generation by providing greater flexibility for both the retirees and new entrants.
While modest investments were made into various priority areas for Canadian agriculture - succession on farms, market development and building processing capacity - the CFA was disappointed to see that certain barriers to intergenerational transfers were not addressed and commitment for investment in crop varietal development research and climate change adaptation was not made.
Key agricultural considerations concerning the 2015 Federal Budget include:
The two most significant announcements on this front are the increase of the Lifetime Capital Gains Exemption immediately to $1 million, from $800,000, which is estimated to save producer $50 billion over the next 5 years in capital gains taxes. In addition, the small business tax rate was decreased from 11 per cent to 9 per cent. This is a significant decline in tax rates for small businesses, which should lend support to farm businesses as well. There are also additional investments made into small business financing.
In regards to the consultation on eligible capital property, which was announced in last year's budget and would result in additional tax burdens being imposed upon the sale of farm quota, the federal government has committed to continue this process and engage with relevant stakeholders. CFA and the national supply managed commodity organizations have raised concerns around the implications of this measure, as it relates to farm quota sales for farmers entering retirement. We look forward to continued engagement with Finance Canada on this front.
Minor investments were announced to funding the centralization of labour market information and investigation into barriers facing farmers in obtaining labour, addressing key challenges facing farmers.
The Government has also continued its commitment to reduce EI premium rates through a seven-year break-even EI premium rate setting mechanism, which would ensure any surplus resulting from employer and employee payments will be returned through lower rates in the future. The Government has also extended the working while on claim program, reducing disincentives while working on EI. This ensures that seasonal workers claiming EI can benefit from part time jobs in the off season without being penalized through reduced total compensation.
The expanded role in establishing international science-based standards outlined in the Budget is welcomed. Canadian agricultural trade faces numerous non-tariff barriers and standards across the globe that are not based on science. Examples of this include the recently completed CETA agreement with the EU and the topic of GMOs. Non-science based standards are likely going to become a bigger issue with trade amongst developed countries as the agriculture sector deals with social license issues in these countries.
CFA's recently established Internal Trade Committee is opportune given the Government's announcement to establish an Internal Trade Promotion office. The CFA's Committee will be an avenue to provide farmers viewpoints on this issue moving forward.
Starting in 2016-2017, $10 million per year will be directed to NSERC for collaborative projects between companies and academic researchers targeting natural resources, energy, advanced manufacturing, environment and agriculture. While any investment in collaborative agricultural research is welcomed, it remains unknown to what extent this money will be allocated to agricultural projects.
CFA's pre-budget submission touched on the following research priorities: increased funding and priority given to research in climate change adaption and risk management, and ecological goods and services. As these areas were not specifically outlined in the Budget, the CFA encourages the Government to consider the importance of these items and allocate the appropriate resources.
The Government showed a commitment towards bolstering Canada's manufacturing industry. As the Canadian food processing industry is the largest manufacturing industry in Canada, producing $92.9 billion in shipments and purchases nearly 40% of farm production, changes in this area are certainly pertinent to farmers. Accelerated capital cost allowance, first introduced in 2007 to encourage investment in machinery and equipment used in manufacturing and processing, would have expire at the end of 2015. The Government has extended this accelerated rate to any eligble assets acquired after 2015 and before 2026. This incentive will encourage Canadian food manufacturers to continue making long-term investments in machinery and equipment and help bolster productivity.