QUESTION PERIOD — National Revenue
Capital Gains Deferral
April 29, 2026
Senator Moreau, when a farm is passed down from the owner to their child, the child can defer paying capital gains tax as long as they keep the property as a working farm. The capital gains deferral is intended to support the succession of family farms. However, changes put forth by your government in recent years on capital gains tax deferrals are for immediate family members only and do not include nieces, nephews or other extended family. This poses a significant financial burden for many and is impacting the number of farms being passed down. Canada is losing thousands of farms every year because of these outdated rules. There are few people with the interest, knowledge, work ethic and financial backing to take over a family farm.
Senator Moreau, amendments to the Income Tax Act are crucial to allow family farms to be passed down through generations to extended family members. How will your government reform agricultural tax policies to protect family-owned farms and support the intergenerational transfer of farms in Canada beyond immediate family members?
Thank you for the question, Senator Black.
I know how important it was for my father to be able to transfer the farm to my two older brothers. Now the farm is owned by my nephew, but that happened through the direct line of succession, as his father owned the farm.
It is an important question. I will raise the issue of clarifying who is included as immediate family for tax purposes with the minister.
I want to remind you that in Budget 2025, the capital gains inclusion rate will remain at 50%. That is a decision of the government. The lifetime capital gains exemption now applies for up to $1.25 million of eligible capital gains.
This matter is very serious, and I will bring it to the minister’s attention.
Thank you for that answer.
In Canada, 98% of farms are family owned and operated, but the RBC Climate Action Institute found that up to 40% of farmers will be retiring by 2033. Succession planning for farmers is vital to ensuring farmers can continue to produce food, fibre and fuel for generations. However, Canada’s current policy frameworks add further burdens to an already complex and challenging decision.
Senator Moreau, how is your government supporting family farms and planning for the future so we can ensure long-term stability in Canada’s agriculture and agri-food industry?
In addition to the capital gains inclusion, the government worked to facilitate a rollover provision that allows an individual to transfer the title of an asset on a tax-deferred basis. It is also protecting a reserve provision that will allow proceeds from the sale of property to be claimed by the seller for up to five years to provide farmers fiscal room as they begin or take over agricultural enterprises.
