Flaw in Income Tax Act for business transfers inherently unfair, bad for the economy
TORONTO, Feb. 7, 2017 /CNW/ - The Canadian Federation of Independent Business (CFIB) is encouraging Members of Parliament to support Bill C‑274, a Private Member's Bill put forward by the Honourable Guy Caron to amend the Income Tax Act as it pertains to the transfer of small businesses, family farms or fishing corporations. A vote on the bill is imminent.
"CFIB encourages all Members of Parliament to vote to pass this bill to the committee stage," said Dan Kelly, President of CFIB. "The bill aims to address a significant and costly flaw in Canada's succession planning rules that, incredibly, makes it easier to sell a family business to a third party than to a member of the family."
In Canada, when an individual sells their business to a family member, the difference between the sale price and the price originally paid is considered a dividend. If the individual sells the business to an unrelated person, it is considered a capital gain. This nuance in the Income Tax Act discourages the transfer of a business to a family member because the transaction does not include the right to a lifetime exemption and is, therefore, more heavily taxed.
"Guy Caron's bill proposes amendments to the Income Tax Act that will ease the tax burden on a large number business owners, who simply want to pass their business on to their children or grandchildren," explained Mr. Kelly. "CFIB supported a similar bill that was introduced by Liberal MP Emmanuel Dubourg during the previous government's term in office. We think it has come time the government take action to level the playing field for family businesses."
CFIB is Canada's largest association of small and medium-sized businesses with 109,000 members across every sector and region.
SOURCE Canadian Federation of Independent Business
For further information: To arrange an interview with Dan Kelly, please contact Kiara Morrissey at 416-222-8022, 647-464-2814 or firstname.lastname@example.org.