Home » Keeping the business “in the family” is now advantageous

Keeping the business “in the family” is now advantageous

by archyw

Bill C-208 received Royal Assent on June 29. Amending Canada’s Income Tax Act, this legislation grants the same tax treatment to owners selling their business to a family member or to an unrelated person.

According to the Union des producteurs agricoles (UPA), the old tax framework favored the sale of a farming business to a foreigner rather than to a family member. For the Canada Revenue Agency (CRA), an intergenerational transfer was a dividend and not a capital gain.

“The farmer was taxed if he sold to his family, but paid no tax by selling his farm to a foreigner,” said James Allen, president of the Fédération de l’UPA de la Chaudière-Appalaches.

Many farmers approaching retirement want to keep their farms in the family fold. James Allen, owner of Ferme Jallen in Saint-Anselme, is part of the lot.

“I represent the sixth generation on our farm. One of my sons already has a stake in the business. We have started the transfer process, even though I am not yet ready for retirement, ”he explains.

Liberal turnaround

In February 2020, Bill C-208 was introduced by Conservative MP Larry Maguire. In the House of Commons, he received the unanimous support of members of the Conservative Party, the New Democratic Party (NDP) and the Bloc Québécois, but not the Liberal Party.

Richard Lehoux, Federal Member of Parliament for Beauce (courtesy – Bernard Thibodeau)

After royal assent in the Senate, the Trudeau government wanted to postpone the entry into force of Bill C-208 until January 1, 2022. In a minority situation, the Liberal Party could nullify the legislation by calling an election this fall.

For James Allen, this gesture was illegal and shows that the Liberal Party does not understand the needs of small entrepreneurs. Richard Lehoux, federal MP for Beauce, agrees.

Read Also:  FMF and Wolverhampton join forces to benefit schools in Campeche

“This law affects farmers, but also all types of SMEs. In a minority situation, it is already rare for a bill introduced by the opposition to be approved in the House of Commons. It is purely liberal political obstruction, ”says the Conservative MP.

Deputy Prime Minister and Minister of Finance Chrystia Freeland confirmed on July 19 that the changes now have the force of law. The Liberal Party was concerned about technical elements that might unintentionally provide opportunities for tax avoidance.

“The changes we intend to introduce will respect the law passed by Parliament,” said the latter.

Richard Lehoux still sees the bad faith of the Liberal Party. “The majority of the Liberals opposed C-208. If there are elections this fall, it is very likely that these changes will never be discussed in Parliament, ”concludes Mr. Lehoux.

0 comment
0

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.