Bill C-208, an act to amend the Income Tax Act, received royal assent in June of 2021. The act, which governs the rules and regulations regarding the transfer of agriculture businesses between family members, was applauded by many in the farming industry.
Farm business advisors and accountants might be telling farmers and ranchers that changes are coming, but what do those changes actually mean?
Ryan Kehrig with MNP’s taxation services joined Shaun Haney on RealAg Radio, to shed some light on the bill’s passing and how the legislation — and potential fixes to it in the near future — will impact farming and ranching families.
“One of the key aspects of Bill C-208 is that is opens up the ability to put a family farming corporation that has siblings [working together] in an ownership structure,” says Kehrig.
Historically, the department of finance’s position was that siblings in a family farming corporation were deemed to be not related to one another, regardless of the fact that they are siblings. Bill C-208 changed this punitive piece of the income tax act, so that siblings are deemed related, if they meet the definition of a family farming corporation.
Kehrig says that Bill C-208 makes it much easier to split a farming corporation between siblings, into separate corporations, falling into a much simpler tax regime with more flexibility for splitting up assets.
“Doing the split does not mean that you have to stop farming together with your sibling,” says Kehrig. There are plenty of structures where siblings can farm just as they have in the past, except now there would be a clear division of assets, and if siblings want to go their own way, they can.
Check out the full conversation with Kehrig and Haney below, where Kehrig explains that Bill C-208 is a large piece of legislation and contains many changes to how farm succession can happen:
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