“(This) is a responsible measure that will reduce operating costs for truckers and businesses in the food, agriculture, housing, construction, and delivery sectors,” he said.

In a news release, the federal government said it intends to introduce amendments to the Excise Tax Act that would temporarily suspend the application of federal fuel excise taxes on gas, diesel and aviation fuel.

The excise taxes are currently set to 10 cents per litre on gas and four cents a litre on diesel fuel and aviation fuel. Once the suspension expires, the excises taxes will return to those amounts.

The federal government estimated that the tax suspension would provide more than $2.4 billion in total tax relief.

Truckers pleased

The Canadian Truck Operators Association welcomed the announcement. In a statement, the association said it had raised concerns in late March when diesel prices exceeded $2.39 per litre in parts of the greater Toronto area.

“For many small carriers and owner-operators, every cent matters. This measure will provide meaningful short-term relief and signals that government recognizes the challenges facing an essential industry,” said association spokesperson Tej Dulat.

The effectiveness of the measure will depend on how efficiently fuel costs reductions are reflected across the supply chain, the association said. It will be important that fuel costs reductions are clearly reflected at the pump.

Provinces may consider similar short-term measures, Dulat added.

-With files from Reuters

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On March 27, federal Agriculture Minister Heath MacDonald announced that the government will propose amendments to the Income Tax Act to extend the income tax deferral period for livestock producers in Alberta, Saskatchewan and Manitoba.

Eligible producers received compensation for their animals to be destroyed due to bovine tuberculosis in 2024 and 2025.

This action is a response to concerns from livestock producers about the challenges of replenishing their herds during the same tax year that they received compensation.

Under the Health of Animals Act, the Canadian Food Inspection Agency provided compensation to livestock producers whose animals were destroyed in 2024 and 2025 due to the bovine TB outbreak.

A section of the Income Tax Act allows for only a one-year deferral, but the proposed amendments will allow livestock producers to defer compensation for a prescribed schedule from 2026 to 2030, enabling them to have greater flexibility to manage their incomes and sustain their operations as they rebuild their herds.

Producers who received amounts as compensation in 2025 or 2026 under the Health of Animals Act because they had to destroy their animals due to tuberculosis outbreaks will have the option of including those amounts in income for tax purposes as follows:

• Up to 100 per cent of the compensation deferred to the 2027 tax year, with at least 83 per cent included in income in 2027.
• Up to 17 per cent of the compensation deferred to the 2028 tax year, with at least nine per cent included in income in 2028.
• Up to eight per cent of the compensation deferred to the 2029 tax year, with at least four per cent included in income in 2029.
• Up to four per cent of the compensation deferred to the 2030 tax year, with the remaining four per cent included in income in 2030.

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From April, the threshold for individual inheritance tax relief will rise to 2.5 million pounds (C$4.62 million) from 1 million pounds, significantly reducing the number of farms and agricultural business owners facing higher tax bills, the government said.

“We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms,” Environment Secretary Emma Reynolds said in a statement.

“It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities,” she said.

Tom Bradshaw, president of the National Farmers Union, said the original proposals represented a “pernicious and cruel tax” that his organization had fought for 14 months.

“I am thankful common sense has prevailed and government has listened,” Bradshaw said. “From the start the government said it was trying to protect the family farm and the change announced today brings this much closer to reality for many.”

Tractor protests in London

The move represents the latest policy reversal by Prime Minister Keir Starmer’s government. In July, it backed down on plans to cut welfare spending, and in June it scaled back a proposal to reduce subsidies on energy bills for the elderly.

Under the revised rules, 100 per cent relief will apply up to the new 2.5 million pounds threshold, with 50 per cent relief on assets above the new level. Spouses or civil partners will be able to pass on up to 5 million pounds’ worth of farm assets between them, the statement said.

The government estimated that around 85 per cent of estates claiming agricultural property relief in the 2026/27 year, including those that also claim for business property relief, will pay no more inheritance tax as a result of the changes.

The original announcement in 2024, which ended an exemption from inheritance tax for agricultural families from next year, triggered protests in London by tractor-driving farmers that have continued regularly.

The government had said the measure was intended to raise revenue to help pay for strained public services. Farmers warned it would destroy family farms and cut food production.

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“Our research shows that an average grain farm in Canada, most of which are family owned and operated, will see a tax increase of 30 per cent due to the two-thirds capital gains inclusion rate,” said Kyle Larkin, Executive Director of GGC in a news release, adding “this hike targets farmers’ retirement plans, complicates intergenerational transfers, and threatens the long-term viability of family farms across the country.”

The 2024 federal budget proposed several key changes to the way capital gains are taxed in Canada:

• After June 25, 2024, any capital gains up to C$250,000 remain subject to the normal 50 per cent inclusion rate, however, gains above C$250,000 will be subject to a new 66.67 per cent inclusion rate for individuals.
• All capital gains generated through a corporation will be subject to a 66.67 per cent inclusion rate.
• The lifetime capital gains exemption for eligible property increases from $1,016,836 to $1,250,000.

Since many family-run grain farms are structured as corporations, family members can become shareholders in the corporation. During the sale of a farm, shareholders can each use their lifetime capital gains exemption upon the sale of their shares. While the combination of two lifetime capital gain exemptions would help reduce the taxes owing by each individual, ultimately the proposed changes will still result in a substantial increase in taxes, according to the GGC research.

In examples provided by the GGC, an 800-acre farm purchased in 1996 in Ontario would incur nearly C$1.2 million in additional taxes if sold today, while a 4,000-acre farm in Saskatchewan would face an increase of just over C$900,000.

“With over 40 per cent of farmers nearing retirement over the next decade, this tax increase introduces substantial uncertainty into their retirement planning,” said Andre Harpe, GGC Chair and Alberta grain farmer in the release. “Despite Budget 2024’s title of ‘Fairness for Every Generation,’ this change will actually burden the next generation of farmers, who are already grappling with costly transfers.”

With the higher taxes leading to increased costs for transferring a farm to the next generation, “this puts the family farm at risk, as the only ones that will be able to afford to pay millions of extra dollars will either be corporate farms or development companies,” said Larkin.

Already, Canada is experiencing a decline in family-owned farms, with a two per cent decrease between 2016 and 2021, according to the most recent data from Statistics Canada.

“To protect family farms, we are asking the government to exempt intergenerational transfers and allow them to be taxed at the original capital gains inclusion rate,” said Larkin. “This will ensure that farmers’ retirement plans remain secure and that the next generation can afford to take over, enabling family farms to continue being the backbone of Canada’s agriculture sector.”

With 40 per cent of Canadian farm operators set to retire over the next decade, “we need to ensure that the proposed personal income tax measures announced in Budget 2024 do not jeopardize the transfer of assets from one generation of farmer to another, but rather encourage the next generation of farmers to take up the calling, drive much needed rural economic activity and help the agriculture sector reach its growth potential,” said the Canadian Federation of Agriculture in a separate news release.

“By ramming these very significant tax changes through while farmers are in the field planting, we aren’t giving producers enough time to fully assess the implications for their families and their businesses,” said Keith Currie, CFA President.

*Update: A comment from the Canadian Federation of Agriculture was added.

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The controversial abolition of tax breaks and diesel subsidies for farmers will not happen in one swoop, the spokesperson said.

Instead, tax concessions for agricultural diesel will be reduced by 40 per cent this year, then by 30 per cent in 2025 and a complete end to the subsidy from 2026.

The planned abolition of the tax break prompted hundreds of German farmers to protest in central Berlin last month.

German Chancellor Olaf Scholz’s three-party coalition announced in December an agreement on the key points of the draft budget for 2024 following weeks of negotiations.

The agreed changes to the 2024 draft budget announced on Thursday, which also impact a plastic levy and funds for the national railway, will result in 2.5 billion euros (CAD $3.66 billion) less in savings than initially anticipated, said the government spokesperson.

–Reporting for Reuters by Maria Martinez.

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After a constitutional court ruling last month that cancelled 60 billion euros of earmarked debt, the federal government last week announced plans to save around 900 million euros ($983.34 million USD) annually in subsidies for farmers.

According to next year’s budget, a partial tax refund on agricultural diesel, along with a tax exemption for agricultural vehicles, will be abolished to meet the saving targets – a measure farmers said would threaten their livelihood and the competitiveness of Germany’s agricultural sector.

Farmers protested the planned cuts at the Brandenburg Gate, carrying placards reading “YOUR POLITICS ARE A DECLARATION OF WAR AGAINST FARMERS” and “TOO MUCH IS TOO MUCH! IT’S OVER NOW!” parking a number of tractors along Berlin’s Strasse des 17. Juni boulevard in central Berlin.

Germany’s DBV and LSV farmers lobbies called for the protest last week and on Monday threatened to organise further country-wide demonstrations if the measures were implemented.

“Then from January 8th we will be present everywhere in a way that the country has never experienced before. We will not accept this,” DBV President Joachim Rukwied said.

The cuts, agreed by the ruling coalition leaders of the Social Democrats, Greens and Free Democrats, could cause dispute not just within the coalition, now opposed by FDP liberals, but also within the Greens party itself, as Greens Agriculture Minister Cem Ozdemir joined the farmers in Monday’s protest.

“I will do everything in my power so that this won’t happen this way, ladies and gentlemen,” Ozdemir said.

Additional burden

Farmer Jule Bonsels from the western Rhineland region said the tax break cancellation meant an additional financial burden of some 20,000 euros per year.

“I personally find this unacceptable. We must give young people prospects, and these plans totally kill it,” she added.

Government spokesperson Steffen Hebestreit on Monday said decisions on the 2024 budget were in place and won’t be reopened, adding that the details of implementation were still being examined.

The cuts also aim to help reduce greenhouse emissions in the country’s agriculture sector that was responsible for 55.5 million metric tonnes of greenhouse emissions last year, roughly 7.4 per cent of the country’s total.

Environmental groups said farmers could bear the financial burden of the cancelled subsidies, citing profits made from rising food prices and other agricultural subsidies that are still in place.

“With all understanding for the farmers – making agricultural diesel cheaper by the state is expensive, harmful to the climate and should be abolished,” Greenpeace agricultural expert Martin Hofstetter said in a statement on Monday.

Erwin Decker, a wine farmer in Germany’s Black Forest region, said implementing the planned cuts would force many family-run farms to close across the country.

“What are we supposed to do? The land is there. It has to be harvested and if it turns into a jungle, no one gains anything,” Decker said.

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The federal finance department on Nov. 16 posted its legislative and regulatory proposals for changes to the UHT online and has teed up a consultation period for those proposals. Canadians and other stakeholders and organizations are asked to submit comment via email by Jan. 3, 2024.

The UHT — an annual, one per cent tax on ownership of vacant or “underused” housing in Canada which took effect Jan. 1 last year — has led a clutch of national farm groups to call on Ottawa for a blanket exemption for farmers from having to file a UHT return.

Canadian citizens and permanent residents are exempt from the UHT, but many corporations are not. That means a farm operating via a Canadian corporation or partnership with a residential property is required to file a UHT return each year, even if other exemptions mean no UHT will be owed.

Furthermore, the farm groups said, while some forms of farm worker housing, such as a bunkhouse or mobile home, are exempt, a detached house used for worker housing is not. That rule, they said, amounts to a penalty on higher-quality housing options for farm workers.

Freeland’s proposal would see certain types of corporations and partnerships added to the list of “excluded owners” for the purpose of UHT reporting — which means those entities “would no longer have UHT reporting obligations.”

The proposal would exclude:

• a “specified Canadian corporation” — that is, a Canadian corporation in which foreign individuals/corporations hold less than 10 per cent of votes or equity;
• any partner of a “specified Canadian partnership” — generally, a partnership whose partners are exclusively “Canadian”; and/or
• any trustee of a “specified Canadian trust” — generally, a trust whose beneficiaries are exclusively “Canadian.”

Freeland’s proposal would also set up a new UHT exemption for “residential properties held as a place of residence or lodging for employees.”

That new exemption would cover residential properties anywhere in Canada, except those in a census metropolitan area or “a census agglomeration having 30,000 or more residents.”

Those changes are expected to apply for the 2023 calendar year and subsequent years, the government said.

Not retroactive

Federal Revenue Minister Marie-Claude Bibeau tweeted Wednesday on X that the fall economic statement “addresses major irritants” of the UHT, particularly by broadening its definition of “excluded owner.”

That move will “eliminate the need to file (UHT) returns for many Canadian businesses, such as agricultural businesses,” said Bibeau, a former federal agriculture minister.

However, she noted in response to other X users’ replies on Wednesday, the changes will not be retroactive to the 2022 tax year.

UHT filers have been granted two “transitional” extensions to file for the 2022 tax year without penalty. The first, announced in late March, extended the deadline to Oct. 31; then, on Oct. 31, another extension was granted, giving UHT filers until April 30, 2024 to file their 2022 UHT returns.

However, the government said, UHT returns for the 2023 calendar year will also need to be filed by the normal deadline of April 30, 2024, to avoid penalties and interest.

That said, Freeland’s proposed changes to UHT rules also call for reduced penalties for those who fail to file UHT returns by the annual deadline — and would make those reductions retroactive to the 2022 tax year.

Those penalties — now $5,000 per failure for individuals, and $10,000 per failure for corporations — would be cut to $1,000 and $2,000 respectively. — Glacier FarmMedia Network

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“We urge the government to exempt farmers from the requirement to file a [underused housing tax] return,” said a letter sent to federal ministers.

The Canadian Canola Growers, Canadian Federation of Agriculture, Canadian Cattle Association, Ontario Fruit and Vegetable Growers, National Cattle Feeders, and Fruit and Vegetable Growers of Canada signed the letter, sent to ministers Lawrence MacAulay, Marie-Claude Bibeau and Chrystia Freeland on Aug. 16.

The underused housing tax (UHT) is an annual, one per cent tax on ownership of vacant or “underused” housing in Canada, the Government of Canada’s website says. It took effect at the beginning of 2022.

“The intent is to impose an annual one per cent tax on vacant or underused housing in Canada that’s owned directly or indirectly by persons who are not Canadian citizens or permanent residents,” said Kurt Oelschlagel, BDO partner and national agriculture tax leader, in an April report in Farmtario.

However, while Canadian citizens and permanent residents are exempt from the tax, many corporations are not.

“If you operate your farm through a Canadian corporation or partnership and it owns a residential property, you will be required to file a UHT return, even if no UHT is owed due to applicable exemptions,” Oelschlagel said. “Non-filing can result in substantial financial penalties.”

In the letter, the groups said that the UHT filing requirement is having a negative impact on farmers because many own multiple homes because they bought, leased or inherited farmland with a house on it, or because they house temporary foreign workers.

Bunkhouses and mobile homes, often used to house workers, are exempt however many accommodations still require filing, the letter said.

“Many farm employers have been moving towards higher quality housing for their foreign employees such as detached houses,” it added. Since UHT filing is required for these, it effectively penalizes higher-quality housing for workers, the groups said.

“While we recognize this tax provides an exemption process for which farmers can apply, the professional fees (i.e., accountants) to complete the exemption application can be significant and are simply one more burden upon farmers who are already facing increasing input costs, energy costs and regulatory requirements,” the groups said.

In the letter, the ag groups asked the federal government to exempt farmers from the requirement to file a UHT return without requiring them to apply for this exclusion.

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PSAC president Chris Aylward said he was “setting a clock on this round of bargaining” and that a strike would be called if there is no deal by 9 p.m. ET on Tuesday.

The strike would affect federal services and could delay tax refunds since about 35,000 workers at the revenue agency would walk out in the middle of tax filing season. Passport renewals ahead of summer travel could also be delayed.

“Despite some progress at the bargaining table, our members are frustrated that while negotiations drag on, they continue to fall behind,” Aylward told reporters. “We’ve always said from day one, we need wages for our members that will keep up with inflation.”

PSAC has been in collective bargaining for a new contract since 2021. Tax agency workers initially sought a pay bump of more than 30 per cent over three years, and others are asking for 13.5 per cent over three years. Inflation peaked at 8.1 per cent last year.

Aylward said the offers received so far had fallen short. Prime Minister Justin Trudeau said he was hopeful a deal would be reached to avert a strike.

“There have been constructive advances and offers and we’re very hopeful that we’re going to be able to resolve this, but it’s at the bargaining table that these things happen and we will continue to do that be there in good faith and work on trying to resolve this for all Canadians,” Trudeau told reporters.

The strike would also affect 65 per cent of employees at the Canadian Grain Commission, including most inspectors of outbound grain at ports, according to the commission. Canada is a major wheat and canola exporter.

The commission is working on contingency plans with grain companies to ensure that “critical grain exports can continue,” during a strike, spokesperson Remi Gosselin said.

— Reporting for Reuters by Steve Scherer in Ottawa; additional reporting by Rod Nickel in Winnipeg.

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What may bring changes to the country’s soybean industry are tax increases imposed by the new federal government, according to Benjamin Boroughs, the USDA attaché.

The center-left government of President Alberto Fernandez increased export taxes on soybeans, soymeal and soyoil to 30 per cent and nine for other agricultural products on Dec. 14.

A week later, the government received the authority to further hike export taxes by another three points for soybeans and soy products and six points for other agricultural goods, in an emergency. Boroughs said the government’s move was to increase revenues to expand the country’s social services as a means to stimulate its troubled economy.

Prior to Fernandez being sworn in, Argentine soybean growers marketed a large portion of their crops in anticipation of the tax increases. At this time, it’s unclear whether the government will honour the previous tax rate for those soybeans or not, the attaché’s report stated.

Although dry conditions have continued to be a concern, especially in the provinces of Buenos Aires, La Pampa and Cordoba, Boroughs reported 2019-20 soybean production is still pegged at 53 million tonnes. That would be grown on almost 44.5 million acres, up slightly from USDA’s estimate of 43.2 million, but with a small decrease in yields.

There was a wider difference in ending stocks, with USDA’s forecast of almost 6.6 million tonnes compared to Boroughs’s call for 11.1 million. The attaché cited larger beginning stocks, imports and total supply combined with less domestic consumption and a smaller crush.

That smaller crush has a direct correlation to the financially troubled Vincentin. The largest crusher in Argentina shut down operations at some of its facilities in December.

Along with selling off assets and restructuring its debt, Vincentin has been seeking financial help from the Fernandez government. Boroughs didn’t state if the company received a reply from the government.

— Glen Hallick reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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