Toronto, February 3, 2021 – Members of Parliament have the chance to do the right thing for small businesses and farmers today by supporting Bill C-208, which seeks to amend the rules around transfer of small businesses, farms and fishing corporations to family members, says the Canadian Federation of Independent Business (CFIB). Under the current rules, business owners are taxed more heavily if they sell their business to a family member than to a third party.
“This has been a long-standing issue for family-owned businesses – many business owners rely on the sale of their business to finance their retirement. They shouldn’t be penalized if they choose to keep the business in the family,” said Corinne Pohlmann, CFIB’s senior vice-president of national affairs. “Over the years, Members from nearly all federal parties have proposed this change – the time to act is now, especially with rumors of an election.”
The transfer of businesses to the next generation of entrepreneurs has major implications for the Canadian economy: nearly three quarters of business owners (72 per cent) indicated they would be exiting their business by 2028, representing a transfer of $1.5 trillion. Nearly half (46 per cent) would like their children to take over the business. However, the sale of property to family members is considered a dividend, while the sale to a third party is considered a capital gain, which includes the right to a Lifetime Capital Gains Exemption (LCGE). Business owners who sell to their children cannot benefit from the LCGE, which means that they have to pay a higher tax bill.
“Given what business owners have been through in the past year and how many are making the difficult decision to wind down or close their business, this bill provides opportunity to make it easier for those who wish to sell to family members to do so,” added Pohlmann. “Small business owners and farmers are counting on all parties to ensure its quick passage through Parliament.”
Read CFIB’s letter on Bill C-208 to Members of Parliament for more information.
For media enquiries or interviews, please contact:
Milena Stanoeva, CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.