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Family farms breathe easier as Liberals ditch tax proposal

The executive director of the P.E.I. Federation of Agriculture is "cautiously optimistic" about Ottawa ditching proposed tax changes that would have made it difficult for families to pass their farms on to their children.

'Hopefully at the end of the day, the changes don't hurt family farms here on P.E.I.'

Cody MacKay · CBC News ·
Tax proposal would have made it difficult for farmers to give their business to their children. (Submitted by Natalie Loo)

The executive director of the P.E.I. Federation of Agriculture is "cautiously optimistic" about Ottawa abandoning proposed tax changes that would have made it difficult for families to pass their farms on to their children.

Robert Godfrey says the Federation has been part of a cross-Canada lobby against federal finance minister Bill Morneau's tax proposals that were revealed this summer.

On Thursday, Morneau announced that he has listened to the outcry from farmers and lobby groups like the Federation and is going to "take a step back" from the tax proposal that would have restricted the conversion of income into capital gains.

Farmers were fearful of the proposed tax change, Godfrey said, because it would have "penalized family farm transfers" in a way that the parents would be stuck with a considerable tax bill after transferring the farm to their child.

"It was sort of incentivizing people to sell their farm to non-family members. That's not the style of family farming here on Prince Edward Island — we wanted to ensure that that wasn't impeded in any way."

'Hopefully ... changes don't hurt family farms'

The Liberals' withdrawal from the tax proposal, Godfrey said, is not a total win, but "it's certainly a step in the right direction."

"We've been working on a weekly basis with them to make sure our concerns … were heard by the right people in finance and the PMO," Godfrey said.

'We've been working on a weekly basis with them to make sure our concerns … were heard by the right people in finance and the PMO,' says Robert Godfrey. (CBC)

Though the Liberals are taking a step back for now, Godfrey said the "devil still remains in the details" as the feds haven't tabled any sort of legislation yet.

"I have to see it on the floor of the House of Commons to see if we're getting what it is we've asked for," he added.

"Hopefully at the end of the day, the changes don't hurt family farms here on P.E.I."

With files from Laura Chapin

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