Many farmers have expressed concerns about the increase in the capital gains inclusion rate. While they are right to be worried about the changes proposed in the 2024 federal budget, no draft legislation has been released yet.
The waiting game
With no draft legislation in place, there are still lots of unknowns.
For that reason, we are advising farmers not to overreact, but to wait and see what the legislation will be. Of course, it would be prudent to speak to your advisor or manager at Baker Tilly for some planning points, but without any draft legislation, we are unable to provide any definitive answers.
What we know so far
Budget 2024 proposed to increase the capital gains inclusion rate from one‑half to two‑thirds, for dispositions occurring on or after June 25, 2024.
Corporations and trusts would be subject to the higher inclusion rate on all capital gains.
For individuals it’s different. The first $250,000 of capital gains you realize each year as an individual would still be at the old inclusion rate of 50 per cent. But any capital gains you realize that are greater than $250,000 would be taxed at the higher rate.
Trying to beat the deadline
If you have a corporation or you’re already in the process of selling a farm or quota that is not covered by a capital gains exemption, it would make sense to try and push that sale through before June 25. Other than that, avoid rushing into any sale before the deadline as it’s such a limited window of time and we don’t know what changes we’ll see once the legislation comes into effect.
Stay tuned for more guidance and advice when details of the new legislation are made public.
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