Provincial tax exemption helps next generation

Tuesday, October 21, 2008

by BETTER FARMING STAFF

An Aylmer accountant says people with incorporated farm operations who are making succession plans will benefit most from a new farm exemption under the provincial land transfer tax.

“We’ve had some partnerships that became incorporated and in the past there was no way to get around the land transfer tax,” says Alan Enns of Graham Scott Enns, LLP. “It (the tax) was almost discriminatory towards partnerships as opposed to individuals so I think that (the new change) levels the playing field.”

In 2004, the province exempted farms passed between family members or transferred to a family-owned corporation from the tax. On Oct. 10, it extended the exemption to farmland transferred to one or more family members from a family farm corporation.

Enns says he has clients nearing retirement whose land is held by a company. They have downsized their farms and “the parents just want to retire and wind the company up.”

The new exemption “should save them some money.”

For a family transferring a farm valued at $500,000, those savings would amount to nearly $6,000, says the provincial news release announcing the exemption.

“Ensuring the smooth succession of the family farm supports the continued participation of new generations of Ontario farmers and supports the prosperity of rural Ontario,” says provincial agriculture minister Leona Dombrowsky in the release.

The exemption takes effect retroactively for qualifying farm transfers after Mar. 25, 2008. BF