Justin Trudeau’s Liberal Party is back in power, but as a minority government this time after the general election on Oct. 21, 2019.
The Liberals proposed several changes in their election platform that could have tax implications for small business owners and farmers.
Until the federal budget gets released in Spring 2020, nothing is final.
And it will likely be tougher for the Liberals to get some of their proposed changes approved due to the new minority government.
We’ll have to wait and see what the changes look like, but in the meantime our tax analysts have looked at some of their election platform promises that could impact small business owners and farmers.
We list what they could mean for you below.
More funding for AgriStability
The Liberals proposed a review of AgriStability, an agricultural risk management program.
They also proposed more money from the federal government for the program.
AgriStability provides financial assistance and payments when you experience margin declines that are more than 30 per cent.
They might relax the existing margins to allow for more support, which could mean more farmers would have access to the program.
Easier farm transfer
According to their election platform, the Liberals will “work with farmers on tax measures to facilitate the intergenerational transfer of farms, making it easier for farmers to transfer or sell family farms to family members or others.”
If you are a farmer and want to transfer the farm to your spouse or children, you can do this at your adjusted cost base without tax implications, and capital gains taxes are deferred until the sale of the property.
But if you want to transfer it to another family member - like a sibling, cousin, niece or nephew - you would trigger capital gains tax.
If this meant the expansion of the non-arms length rules to other family members, it would be good news for farmers.
Enhanced AgriBusiness support
To aid in their goal of making Canada the world’s second-largest exporter of agricultural products by 2025, the Liberal platform promised to “merge existing financial and advisory services currently scattered between several agencies into Farm Credit Canada.”
They say they would rename Farm Credit Canada (FCC) to Farm and Food Development Canada, and they would increase the organization’s lending capability by up to $5 billion per year.
While the application process would likely stay the same, it could mean more money available to farmers to access the program - with the revamped organization being a “one-stop shop” for farmers looking for agricultural loans.
Lower costs for start-ups
The Liberal party made a few pledges to make it less expensive to start a business:
- Cutting the cost of federal incorporation by 75 per cent, from $50 to $200
- Eliminating fees for business mentorship and training from the Business Development Bank of Canada, Export Development Canada, and Farm Credit Canada
- Creating the Canada Entrepreneur Account, administered through the Business Development Bank of Canada, to provide up to 2,000 entrepreneurs with as much as $50,000 each to launch their new business
Lower costs for small business owners
They made campaign promises that could impact small business owners, including:
- Eliminating the “swipe fee” on sales taxes for credit transactions that small business owners pay to credit card issuers
- Giving $250 to business owners looking to create a website or e-commerce platform (no details on how this will be administered; it could be a tax credit)
- Creating a voluntary e-payroll system to automate records of employment for small businesses
A boost for energy efficiency for homeowners
They promised to help homeowners and landlords buy new homes that are zero-emissions certified by giving them a Net Zero Homes Grant of up to $5,000; and $40k interest-free loan for green renovations.
It’s unclear what repayment would look like.
Tax breaks for clean technology
Their platform states, “We will cut corporate taxes in half for businesses that develop technologies or manufacture products that have zero emissions.”
We don’t know what this will look like - it could potentially be administrated through the tax return by identifying the costs associated with technology development.
The Liberal platform says, “To help people whose jobs and livelihoods are affected when disaster strikes, we will move forward with a new Employment Insurance Disaster Assistance Benefit, to be developed in consultation with experts, workers, and employers.”
The benefit would launch in 2021 and help replace lost income when families must relocate due to a climate disaster.
They also pledged an additional $1 billion investment over the next decade into the Disaster Mitigation and Adaptation Fund.
The Liberals promised to streamline trade across provinces by making it easier for professionals licensed in one province to work or practice in another (right now professionals have to pay licensing fees in each province).
The interprovincial barriers may be relaxed moving forward.
A new tax on luxury cars
They pledged to introduce a 10 per cent tax on luxury cars, boats, and personal aircraft over $100,000.
If you’re a small business owner looking at purchasing a luxury vehicle, we recommend you look for a used one.
You can also take advantage of the Accelerated Investment Incentive, where you can claim 150% of the normal capital cost allowance (CCA) rate in the year of purchase (previously only 50%).
Disclaimer: The material above is provided for educational and informational purposes only. Always consult a tax professional like FBC regarding your specific tax situation.