It was a full house on Sept. 19 as over 100 farmers packed into Cardiff Hall to hear about the federal government’s proposed tax changes.
Jeff Nonay, part owner of Lakeside Dairies, shook his head as an agricultural tax expert said the federal changes would prevent owners from preparing for the future.
“There’s a lot of people with the mindset that in 20 years from now there won’t be a family farm,” Nonay says afterwards. “I’ll be earning a paycheck from a large corporation if I want to run a farm. That perspective is frightening.”
Lakeside Dairies is a family dairy farm that has been passed down to Nonay from his parents. He says he had plans to eventually pass the farm down to his children, who are all under the age of 10.
But with the proposed tax changes, he fears that’ll be next to impossible.
Nonay says the changes make Canadian farms less competitive and will drive up the costs of passing them down in the family.
“The whole move away from family farming is really concerning,” he says.
Nonay says he was in a phone interview with a publication from Illinois last week and was asked about the changes while talking about NAFTA and dairy farming.
“He was well aware and was asking me questions on this tax planning from down there and was looking for where he could find more information. I think that’s a double hit for us again on that one,” he says.
He says there’s nothing stopping farmers from the U.S. from moving to Canada and ending the family farm business. With owners paying up to the highest tax bracket, Nonay says families could be driven to work for third-party owners instead of operating their own farm.
In July the federal government proposed three tax changes, which they say will prevent high-income earning households from paying less tax than the middle class.
The Canadian Chamber of Commerce, however, said that farmers and small business owners will be negatively impacted by the changes.
On Wednesday the St. Albert and District Chamber of Commerce held an information session where two accountants spoke on the changes.
Tax experts Rob Heron and Allan Sawiak from accounting firm Kingston Ross Pasnak spoke at the event.
Vivian Kaup, owner of Kaup Farms Ltd., says she fears for the future of her farm. A family rule is before you work on the field, you go to school and earn certification for a trade.
The family currently splits their income among members. Splitting, or spreading income, consists of sharing business income among family members in the form of dividend payments.
Currently income can be shared among family members even if they’re not directly contributing to the business. With the changes, business owners would have to prove that members receiving income have directly contributed labour and time to the business.
Kaup says she fears they will no longer be able to split income with their children while they’re in school.
“They’re changing that and it’s just wrong,” she says. “It’s very complicated and it’s going to affect all young people who want to farm.”
Her son, Dale Kaup, says he’s frustrated with the changes for a different reason. He currently owns a small business with his brother in Saskatchewan and has shares in the family farm.
“I’m involved in the family farm but at arm’s length,” he says. “I have shares in the farm but I don’t spend time in labour so that complicates it a lot.”
During the presentation Heron said farmers and business owners filing taxes won’t know if they’ve made a mistake for up to two years.
That means if a family files for income splitting but doesn’t qualify, they might not know until they’ve filed taxes twice.
Michael Cooper, Conservative MP for St. Albert-Edmonton, says the changes are a cash grab for a government with a spending problem.
“What the department of finance figures show is that the government has actually lost revenue. So the tax increases have not brought in the revenue that they expected, meanwhile Justin Trudeau and his Liberals are running massive deficits that are piling on mountains of debt that future generations are going to pay for,” he says.
Cooper says the changes could have business owners paying up to 70 per cent in taxes, crippling restaurants and small businesses in St. Albert.
Since the proposed tax changes were unveiled, Cooper says his office has received waves of calls, letters and emails opposing the changes.
Heron, who presented at Cardiff Hall, will speak to business owners about the proposed changes on Thursday at St. Albert Inn and Suites. Cooper is hosting the event, which will start at 7 p.m.