Canada recently passed Bill C-208, a new law to benefit parents selling their small businesses to their children. Effective June 29, business owners are now eligible to transfer their shares at market value to their children or siblings and claim approximately $870,000 in capital gains.
Why is this important? Under the new Income Tax Act, which this legislation amends, more children can now continue their family business without facing tax penalties.
This law also allows the business owner’s siblings to be considered rightful related parties, which will smooth the transition if they decide to divide shares.
The government is intending to benefit small business owners and support Canadian family-owned companies while avoiding tax loopholes. This gives family businesses control over their company and presents opportunities that they may not have had in the past.
Some technical details of the bill still need to be discussed before it comes into effect on January 1st, 2022. Taxpayers are expected to follow the guidelines to prevent misdemeanours.
BuyAndSellABusiness.com is a worldwide marketplace that aims to connect entrepreneurs, business owners, franchise owners and professionals to buy or sell their businesses. This new legislation makes it even easier for family members to transfer their business online. We provide a secure platform to do so.
