The federal government’s Ministry of Finance says it is delaying implementation of Bill C-208 until January 1, 2022, potentially with amendments.
However, Canadian law states that a bill goes into effect immediately after receiving Royal Assent, which the bill did on June 29, 2021, unless some other date is stipulated in the bill.
Bill C-208 is a private member’s bill introduced by Manitoba MP Larry Maguire which stipulated a change in how the sale of a corporation between family members was handled. Before the bill, the sale between farm family corporations faced a different taxation structure than that of a sale between non-related people.
Given the delay, producer groups and political figures are speaking up about the — perhaps unconstitutional — delay in implementing the bill.
S.5(2) of the Interpretation Act states that a law comes into force on Royal Assent if not specified. Further, Parliament effectively lowered taxes by passing C-208 so the Crown is imposing a tax without Parliamentary approval. This violates constitutional principles #cdnlaw https://t.co/m3tdvsKSnF
— Lyle Skinner (@SkinnerLyle) July 8, 2021
The Canadian Federation of Agriculture (CFA) is concerned about the negative impacts on family farms that will come from the unprecedented delay to enact Bill C-208 as legislation.
CFA and many other stakeholders have strongly supported Bill C-208, as it removes an unfair tax burden that farmers face when transferring their farm to a family member.
“In our talks with the accounting community, this delay, and the uncertainty around exactly what the amendments will be, will force many farmers who were looking to transfer their farm to a family member to delay their retirement plans until 2022. If they transfer to a family member under the current rules, it can potentially cost them hundreds of thousands of dollars more in taxes compared to if this Bill was fulfilled,” says Mary Robinson, CFA president, in a press release.
Conservative leader Erin O’Toole released a statement Friday saying, “Justin Trudeau is continuing his war on Canadian small business, refusing to implement a tax reduction for small business that was passed in Parliament. In the past, the Prime Minister called these hardworking business owners tax cheats and used this outrageous attack to justify a massive tax hike on the small business community.
“When the Prime Minister decides to raise your taxes, he’ll go to extraordinary and unprecedented lengths to ignore Parliament and the law, all in the pursuit of sending your tax dollars to Ottawa. The constant corruption, delays, and cover-ups in Ottawa continue even after Parliament ends. It’s shameful and Canadians deserve better.”
CFA’s primary concern is that the capital gains treatment afforded through Bill C-208 to inter-generational family farm transfers must be made clearly accessible as quickly as possible, as Parliament made its intentions clear through the passage of the bill.
CFA has reached out to the Finance Department and will work to ensure that the intent of Bill C-208 remains intact and is law as soon as possible.