OFA wrote the Honourable Chrystia Freeland (Deputy Prime Minister and Minister of Finance) regarding the Lifetime Capital Gains Exemption (LCGE) for Qualified Farm & Fishing Properties (QFFP). Farmers value the LCGE provisions for qualified farm property. Farm succession plans rely on this exemption to aid in transferring the family farm to the next generation.
We appreciate the federal governments commitment to raising the amount of the LCGE limit so that it remains relevant compared to the value of farm assets. The 2007 Federal Budget increased the LCGE to $750,000 from $500,000, the first increase in the exemption since 1988. The Federal “Economic Action Plan 2013” Budget increased the LCGE to $800,000 from $750,000. In addition, to ensure that the real value of the LCGE is not eroded over time, Economic Action Plan 2013 indexed the $800,000 LCGE limit to inflation, with the first indexation adjustment occurring for the 2015 taxation year.
Recognizing the importance of the LCGE to farmers and their family farm succession plans, the 2015 Federal Budget increased the LCGE limit to $1 million. This increase exceeded the inflation amount at the time. However, the government kept the indexation adjustment provisions in place such that the LCGE would remain at $1 million until the indexed amount of the base LCGE ($813,600 in 2015) exceeds $1 million. By our calculations $813,600 in 2015 dollars is equivalent to $1,000,412 in current dollars. Therefore, we anticipate indexation adjustments to the LCGE limit will commence for the 2023 taxation year.
OFA requested confirmation of the exact amount of the LCGE limit for the 2023 taxation year.