In an ongoing monthly series presented by the Calgary Herald and Financial Post, Canadian business leaders share their thoughts on the country’s economic challenges and opportunities.

What makes us Canadian? Top of the list would be hockey, unnecessary apologizing and harsh winters; but for me, our beating heart is the farms and small businesses that feed us and drive nearly half our GDP. They make up 97.8 per cent of employer businesses in our country, embodying the grit and resilience of our identity. Yet, behind the plaid shirts and deep-rooted pride lies a struggle: navigating tax complexities, rising costs and bureaucratic hurdles in a fight just to survive.

Canada’s tax system has become a literal labyrinth, forcing small business owners and farmers to shoulder an overwhelming burden. Each year, new rules stack atop old ones, creating a system even seasoned accountants struggle to navigate. For entrepreneurs already battling razor-thin margins and operational pressures, this complexity acts as a hidden tax – especially for those without access to specialized expertise.

Your weekday lunchtime roundup of curated links, news highlights, analysis and features.

By signing up you consent to receive the above newsletter from Postmedia Network Inc.

A welcome email is on its way. If you don't see it, please check your junk folder.

The next issue of Noon News Roundup will soon be in your inbox.

We encountered an issue signing you up. Please try again

Interested in more newsletters? Browse here.

In 2022, farm input costs jumped 17.4 per cent nationwide, with Prairie farmers facing increases exceeding 20 per cent. Fertilizer, fuel, and machinery costs skyrocketed, compounding the challenges of navigating ever-changing tax laws.

While programs like AgriStability exist, their convoluted application processes and endless requests for information make it look like they’re in the business of denying financial assistance, not providing it. We’ve seen enrolment rates amongst our members decline steadily with less than 10 per cent now participating – another example of how complexity in the system leaves farmers and small businesses stranded in times of need.

Even more recent changes, like the “GST holiday” – designed to offer relief and a boost to business – actually add to the “quiet tax” by adding non-revenue generating work as they figure out details on their own. The policies themselves, combined with the costs of running such an intricate system, highlight a failing approach for small businesses.

It’s estimated that at least 40 per cent of Canada’s farmers will retire before 2034. Budget 2024’s proposed increase in the capital gains inclusion rate – from 50 per cent to 67 per cent – would have forced families that have worked the land for generations to make a difficult choice: Can we afford to pass the farm to a family member? Or should we sell out? That increase died with proroguing Parliament.

The truth is, the burden of capital gains taxes combined with the rising costs of running their business means it often doesn’t make financial sense to keep farms going for the next generation. Instead, we’re seeing farms sold to larger corporations. You can imagine what this does to the diversity of our rural social fabric. Families used to be the cornerstone of these communities, but that is quickly unravelling.

In a decade, the CRA has increased staff by 48 per cent – to six times the “agent per capita” rate of the IRS. Where’s the benefit? We deal with the CRA daily and we have not seen any improvement in service levels. If this were a private business, we’d demand answers. “Why are costs so high? Why hasn’t more staff solved inefficiencies?”

This inefficiency is eroding the backbone of our economy. We need to stop overinvesting in inaccessible subsidies and overly complex tax laws. Instead, the focus must shift to simplifying the system, cutting expenses to run programs, and delivering meaningful support.

What the government must do:

• Streamline tax policy: Simplify laws to reduce complexity and administrative burden.

• Simplify subsidy programs: Make programs like AgriStability more accessible and transparent.

• Reduce delivery costs: Conduct an independent review to optimize operational efficiency and cut excessive costs.

• Protect communities: Good policy can be extremely impactful. Revisit policies so that they can boost communities.

While we wait for our government to take action, small business owners can take steps to lessen the burden. Seeking expert tax advice can help ensure nothing is left on the table. Investing in a comprehensive financial plan, including tax planning, succession and retirement, can safeguard your family and your legacy.

The fight isn’t just about survival; it’s about protecting our identity and social fabric, not letting them unravel due to the unintended consequences of our tax system.

Yves Millette is the CEO of Farm Business Consultants (FBC), serving 15,000 rural Canadian small business owners and farmers.

© Calgary Herald