Taxation on Family Business Transfers - BILL C-274
It would seem at the outset that the intent of Bill C-274 to eliminate the unfair taxation of a family business to a family member is a valid and worthwhile effort by MP Guy Caron of Rimouski, QC
This is especially important given that in today's business environment, many small business, farm and fish operators are looking to divest themselves of their their business to a family member or an unrelated buyer. Current taxation allows for a better disposition by the business owner to a stranger than to a family member. After tax gain due to capital gain/dividend rules provides a much better return to the business owner.
With a sale to a family member, the net gain is considered a dividend with no exemptions and taxes between 35 - 51%. A sale of the same business to a stranger has the net gain considered as a capital gain with a capital gain exemption of between $824,000 and $1m depending upon the business type and an after exemption tax on only 50% of the adjusted net gain.
It would seem that this Bill is something that we as your chamber should support however we are interested to hear of your perspective, especially as a small business owner that may or may not need to pass along the family business in the near future. This bill is set to be debated in the fall session of Parliament.
Send your comments to us at email@example.com or a phone call 204-774-7154
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