Some Manitoba farmers are concerned over how proposed tax changes could affect the industry moving forward.

Federal Finance Minister Bill Morneau announced the tax plan in July, saying it would address loopholes the government believes wealthy business owners use to avoid being taxed at a higher rate. 

The proposed changes limit income sprinkling or income splitting, holding passive investments inside a private corporation, and converting income into capital gains.

The Canadian Federation of Agricultural said all three areas of change have the potential to impact how farmers do business.

The organization's president Ron Bonnett is concerned Ottawa isn't taking the financial risk farmers take on each year into account.

"They have a view that they're targeting people who are trying to use a corporate structure to hide income and avoid taxes, and this is collateral damage," said Bonnett.

Bonnett explained that while many farms incorporate out of necessity, they could now potentially see major consequences for doing so.

"Because farms are so much larger, they will likely have to use a corporate structure just to manage that farm."

But Bonnett said that doesn't mean it's not a family farm.

Similar words come from Rick White, president, Canadian Canola Growers Association, who has heard an outcry from Canadian farmers following Ottawa's announcement.

"But a tax plan that's going to catch them, just because they're trying to compare a $50,000 wage earner with a farmer who's incurring big risk all the time trying to run their family farm business. It's like comparing apples to pineapples," White said.

Impact on family farming

Niverville resident Grant Dyck has been farming since he was 16. He took over the family farm at age 22 when his father passed away, growing Artel Farms into what it is today.

Dyck said farming is a risky business, dependent on a number of variables as unpredictable as the weather.

"We do plan 20 years out because we have to. It's a feast or famine kind of industry," said Dyck.

A father of four, Dyck is concerned about how the proposed changes could affect every aspect of his incorporated business, including how the farm is passed on.

"Inter-generationally they're dissuading the transfer of assets. This is so difficult to get into this industry in the first place."

The Canadian Federation of Agriculture also questioned the potential costs for future farmers buying family property; Bonnett said the big issue with capital gains is that for many farmers, assets are tied up in land and buildings.

"There are some provisions in the new proposal that turning those assets over to the next generation, you may not be able to take advantage of preferential tax rates," Bonnett said. 

"And there could be a huge tax bill associated with that transfer." 

Dyck is now sorting through what the potential changes mean for his farm amid a busy harvest season. 

"It just shows that there's no actual reality here of understanding as to what it is to be in farming in Canada," Dyck said. 

In a statement to CTV news, a spokesperson for Canada's Finance Minister said: 

"What we want to do is prevent the use of complex transactions designed to circumvent existing rules restricting the conversion of dividends to capital gains. These are sophisticated transactions, not simply about the transfer of family farms from one generation to the next." 

October 2 is the deadline for consultations, but the Canadian Federation of Agriculture is hoping the conversation continues beyond that date. 

"Slow down the process, give us time to get proper analysis of what the impact is, then sit down with us to ensure that we're not caught in the trap that was set for somebody else," said Bonnett.