Federal budget proposals could give farm families more options for passing their operations to relatives while allowing faster tax deductions on eligible equipment purchases.

The measures have drawn support from agricultural organizations, although farm representatives say rising operating costs and labour shortages remain concerns.

Budget 2026 proposes expanding the intergenerational farm and fishing property rollover to include transfers to nieces, nephews, grandnieces and grandnephews of an owner or their spouse or common-law partner. The proposed expansion would apply to transfers occurring on or after Jan. 1, 2027.

The rollover allows qualifying property to pass between eligible family members with capital gains taxes deferred. Existing provisions cover transfers to children and certain other descendants. Expanding eligibility would provide another succession option for owners whose next generation of farmers includes extended family. A rollover postpones the tax obligation rather than eliminating it.

The budget also confirms Ottawa’s intention to proceed with the previously announced Productivity Mega Deduction.

Under the proposal, businesses could deduct the full cost of eligible capital investments in the year the property becomes available for use. Grain Growers of Canada says the permanent measure would cover qualifying property acquired on or after Sept. 15, 2026.

The organization welcomed the proposal when it was announced in September, saying earlier deductions could improve cash flow and help producers replace equipment. It also called for straightforward eligibility rules that work for different farm sizes and business structures. 

Federal budget documents identify tractors, combines, seeders, sprayers, balers and farm trailers among eligible agricultural assets. Greenhouses, silos and certain farm buildings are also listed. 

However, taking a large deduction immediately can affect a farm’s taxes in later years.

Saskatoon accounting firm Buckberger Baerg & Partners explains that deducting equipment costs sooner leaves fewer deductions available later. Selling equipment that has been fully written off can also generate taxable income. The firm recommends assessing the timing against the farm’s income and longer-term plans.

In its Nov. 6 response, the Canadian Federation of Agriculture welcomed the succession measures, research tax incentives and proposed improvements to permanent residency pathways that could help agricultural employers facing worker shortages.

The federation also identified unfinished business. President Keith Currie pointed to rising diesel costs and the need to improve Canada’s tax competitiveness against major agricultural trading partners.

Fruit and Vegetable Growers of Canada welcomed efforts to reduce regulatory burdens but said growers need practical results. Its priorities include access to crop protection products, reliable labour, improved business risk management programs and protection for perishable products during trade disruptions.

The organization said it would review the budget’s implementation plans to determine whether the commitments produce measurable improvements for growers.