Tax fairness for Canadian agriculture
Section 31 restricts the ability of legitimate farming and equine businesses to deduct business losses against other income. Fairness for Farmers is calling for repeal to restore tax fairness, retain investment in Canada, and strengthen rural communities.
01 · What Section 31 does
A restricted farm-loss rule.
Where the rule applies, legitimate farm losses are capped at a maximum annual deduction of $17,500 against other income.
Only the first $2,500 of a farm loss plus half of the next $30,000 may be deducted. For farmers, breeders, and equine operators who rely on other income while building capital-intensive businesses, that restriction can reduce cash flow and leave less money for reinvestment. No other sector of the economy faces this same restriction on the deduction of legitimate business losses, placing farmers, breeders, and equine operators at a distinct disadvantage.
02 · Why the rule exists - and why it is outdated
No Longer Needed
Section 31 was enacted in the 1950s to address hobby-farm deductions. Agriculture has changed: modern operators diversify income to manage rising costs, volatile markets, weather, and long investment cycles not to shelter non-farm earnings.
1950S CONCERN
Prevent hobby farms from using losses to shelter unrelated income.
Modern reality
Diversified income often keeps legitimate agricultural businesses operating and investing.
03 · How legitimate businesses are affected
The effects reach beyond the farm gate.
Removing the restriction would help viable businesses use legitimate losses consistently with the rest of the economy.
01
Improve cash flow
Keep more working capital available through volatile seasons and long production cycles.
02
Enable reinvestment
Support spending on infrastructure, breeding, equipment, and innovation.
03
Support productivity
Give legitimate operators more room to build sustainable, competitive businesses.
04
Strengthen rural communities
Support breeders, trainers, grooms, veterinarians, farriers, suppliers, and transporters.
04 · The solution
Full repeal. A clear and consistent ask.
Budget 2026 is an opportunity to remove an outdated barrier and allow legitimate agricultural businesses to operate under the same tax principles that apply across the economy.
Restor Tax Fairness
Improve Canada’s competitiveness
Strengthen rural communities
Retain investment and jobs
No new subsidy or spending needed
05 · The competitive gap
Canada is falling behind.
Recent U.S. tax changes make equine investment more attractive south of the border while Canadian farm and equine businesses still face Section 31.
100%
Immediate deduction available in the U.S. for the cost of qualifying racehorses
Highly mobile
Owners and investors can choose where to buy, breed, train, and race horses
Keep it here
Repeal would help retain Canadian investment, jobs, and rural economic activity
06 · Evidence and policy detail
Understand the case for repeal.
INCOME TAX ACT
31
Background and official sources
The facts behind Section 31
Explore the official legislation, plain-language background, campaign articles, and the proposed structure for the campaign’s policy submission.
07 · Evidence and policy detail
A coalition for fair treatment.
Horse racing organizations across Canada are calling for this targeted fix to restore tax fairness, retain investment in Canada, and support rural economic growth.
08 · Take Action
Write your MP Today
Ask your Member of Parliament to support full repeal of Section 31 as part of Budget 2026 and restore fair treatment for Canadian farmers.