Jake Leguee’s family has farmed between Fillmore and Weyburn for generations. But it could be harder for him to pass the land on to his own kids once the federal government reforms small business taxes.
The federal government’s plan will close tax provisions it calls an unfair advantage for wealthy small business owners. The three-prong approach includes restricting income sprinkling, where incorporated business owners share income to family members in lower tax brackets, limit passive investments, while the third change impacts capital gains.
“As a multi-generational family farm, we deal with all the loopholes (Prime Minister Justin Trudeau)’s trying to close,” Leguee told the CJME Morning Show Thursday. “All of those are things that we need to have access to. If he takes those away, it could cost us a lot more money in taxes and certainly a lot more money in accounting fees.”
“All this is going to do is make it more complicated and more expensive and, for some businesses, it might just be the straw that breaks the camel’s back,” he continued.
Leguee penned an open letter to the prime minister on his blog on Tuesday. In it, he shares his concerns with the tax reform and how it could affect the future of his operation.
“Your tax changes will severely challenge our ability to pass on this farm,” he wrote.
“You will penalize my parents for passing their land on to me. Land that they paid for a long time ago; land that I will never sell. I will never realize the capital gains on that land. Why should my parents be taxed for passing it on? Why should I be taxed for someday passing it on to my own children?”
Leguee said he doesn’t know how much the proposed changes will cost him.
“None of us really have had enough time to even decide what this might cost us,” he said, adding his accountant doesn’t even know what the changes will actually look like.
In his letter to the prime minister, Leguee also took issue with the implication he’s a tax cheat, or that his farm is a tax haven.
“The farm didn’t pay me to save money on taxes, it paid me because I earned it. This taught me the value of hard work, and how to save money and prepare budgets for it. None of this had anything to do with cheating taxes,” he wrote.
Leguee said the loopholes Trudeau is looking to close are there to help him and other small business owners when times are tough.
“On the farm, and I guess it’s the same on a lot of small businesses, we don’t have the ability to go out, like big businesses do, and diversify into other things when times are good,” he explained. “All we can really do is try and build up cash flow so that if things go bad we have that backstop.”
Meanwhile, on Wednesday, Trudeau doubled down on the plan, adding that he is open to changes but it will go forward.
“I guess it’s frustrating that the government doesn’t care about family farms or small businesses in general,” Leguee said.