Budget 2026 for Farm and Agri-Food Owners: The Next Owner Doesn't Have to Be Your Child

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The tax rules for passing on a farm have had a narrow idea of family. Today, the rollover that defers capital gains on transferring farm or fishing property to the next generation works only when the property goes to your child, grandchild or great-grandchild, or their spouse . Budget 2026 proposes to extend it to nieces, nephews, grandnieces and grandnephews of you or your spouse, for transfers on or after January 1, 2027.

For a family where the person who wants to take over is a nephew rather than a son or daughter, that's a real change. This post is written for farmers and agri-food processors. It's part of the Chamber's six-part Budget 2026 series, written for different parts of the membership, and everything here is a proposal until Parliament passes it.

Succession: a wider door, same homework

The government also proposes to amend the Canadian Agricultural Loans Act to improve access to capital for farmers, support intergenerational farm transfers, and reduce costs and paperwork for lenders and producers. The details will come with the legislation.

A rollover defers tax. It doesn't decide who should run the operation, how family members who aren't farming are treated, or how the retiring generation gets paid. Those are family conversations, and the January 1 start date is a good reason to have them before anyone drafts a transfer.

Equipment, and some buildings, written off in year one

The Productivity Mega Deduction would let farms and food businesses write off most new capital assets acquired on or after September 15, 2026 in the year they're put to use. For farming, the budget's examples are tractors, combine harvesters, farm trailers, plows, seeders, crop sprayers, balers, forage harvesters, greenhouses, silos, and frame, log or corrugated metal barns used for farming . For agri-food processing, they include sorting machines, industrial washers, peelers, grinders, blanchers, homogenisers, pasteurisers, bottling equipment, conveyors, and filling, sealing and labelling machines .

The buildings on that list stand out, because the general exclusions cover certain long-lived buildings . Don't stretch that to every structure on the property. The list is illustrative, and the CRA will decide what qualifies once legislation is tabled.

Money for growing and processing more food

The National Food Security Strategy, launched in June 2026, is backed by $3.2 billion over 10 years , and the budget says its program funding streams are now open to applicants. The pieces most relevant to producers and processors:

a $150 million Food Security Fund to help small and mid-sized businesses upgrade equipment to grow, produce and process more food;

a $1 billion Agri-food Project Finance Fund through Farm Credit Canada, providing seed capital financing to expand food processing capacity;

a $100 million Collaborative Food Innovation Fund to help producers expand agri-food processing;

$750 million to expand year-round fruit and vegetable production, including greenhouses and vertical farms;

faster approvals for seeds, feed, fertilisers and veterinary products.

If you process food under a provincial licence, the budget also promises tailored support for businesses seeking the federal licence needed to sell food across provincial and territorial borders . Its example is Lloydminster, where a regulatory change now lets provincially regulated food businesses trade across the Alberta–Saskatchewan border within the city. And as part of the government's tariff response, Farm Credit Canada has made $1 billion in new lending available .

Compliance and costs

CFIA penalties. The government intends to update fines and penalties under the Feeds, Fertilizers, Health of Animals, Plant Protection and Seeds Acts and the agriculture administrative monetary penalties law, and to strengthen the Canadian Food Inspection Agency's enforcement authorities . The direction is toward stronger deterrents, so treat record-keeping as a priority, not an afterthought.

Fuel. The federal fuel excise tax suspension, which the budget describes as relief for food and agriculture businesses among others, runs to the end of January 2027, then half rates until the end of March, then full rates from April 1, 2027 .

Wineries. The Wine Sector Support Program would be renewed with $176.9 million over three years starting in 2027-28 .

Key takeaways

If your successor is a niece or nephew, the proposed January 1, 2027 change could make a tax-deferred transfer possible where it wasn't before. Talk to your accountant before anyone signs anything. Buy equipment and qualifying buildings when the farm needs them, and confirm eligibility rather than assuming it. If you process food, look at the Food Security Strategy streams while they're open. And keep your CFIA records tight.

We'd like to hear how these changes land on working farms and food businesses. If you farm or process food and have a view worth sharing, the Chamber's journal is open to member writers.

This is general information, not tax, legal or financial advice. Budget measures are proposals until passed and can change, so talk to a qualified professional before acting on them.

Sources

Department of Finance Canada: Budget 2026, Tax Measures: Supplementary Information (November 5, 2026)

Department of Finance Canada: Budget 2026, Annex 3: Legislative measures

Department of Finance Canada: Budget 2026, Budget in brief

Department of Finance Canada: Budget 2026, Chapter 1: Canada's Investment Supercycle

Department of Finance Canada: Budget 2026, Chapter 3: A more affordable life

Department of Finance Canada: Budget 2026, Chapter 2: A more competitive and connected Canada

Department of Finance Canada: Budget 2026, Chapter 6: A more efficient government