OTTAWA - A Conservative lead bill to lower taxes on family farm and business transfers passed second reading in Parliament and has now been sent to Finance Committee. Bill C-208 was introduced by Larry Maguire, the MP for Brandon-Souris, and received bipartisan support with 178 MPs voting in favour and 146 against. It was only Members of the Liberal caucus who voted against the bill.
“I am thrilled my colleagues voted in favour of my Private Members Bill to bring tax fairness for countless farm families and small businesses,” said Maguire. “I am however disappointed but not surprised the Liberal government voted against this common sense bill.”
Maguire has been a staunch advocate to change the Income Tax Act, which currently makes it more financially advantageous for a parent to sell their farm or small business to an absolute stranger than it is to their children.
Currently, when a person sells their small business or farm to a family member, the difference between the sale price and the original purchase price is considered a dividend. However, if the business or farm is sold to a non-family member, the sale is considered as a capital gain, which is taxed at a lower rate and allows the seller to use their lifetime capital gains exemption.
Bill C-208 will allow small businesses, farm families, and family fishing corporations the same tax rate when selling their operation to a family member as they would when selling to a third party.
If passed, this bill will allow for sustainable business and farm succession, secure the retirement savings of business owners and farmers who elect to sell their operation to a family member, and allow farms and local businesses to flourish with fewer unfair taxes.
Maguire notes that, “currently, operators have to choose between a larger retirement fund by selling to a stranger and a smaller one by selling to a family member – this is not a choice they should have to make.”
Farms and small businesses from across the country support this bill and Maguire welcomes the endorsements from the Canadian Federation of Agriculture, the Grain Growers of Canada, the Canadian Canola Growers Association and the Canadian Federation of Independent Business.