Family business is our business.
Small businesses are the foundation of our country. They account for 98% of all businesses in Canada. A recent report from the Canadian Federation of Independent Business (CFIB) outlined 72% of business owners intend to exit their business in the next 10 years, representing a transfer of assets worth $1.5 trillion dollars.
Many of these business owners intend to pass on their business to family members. However, as the current Federal Income Tax Act reads, if a business is sold to an unrelated person, it is considered a capital gain. But if that same business is sold to a family member, the difference between the sale price and the price originally paid is considered a dividend.
The challenge is that capital gains are taxed at a lower rate than a dividend.
Right now, the dollar difference between the sale to an unrelated person versus a family member can be significant and reduce the chances of a business staying in the family to the next generation.
At Park Place Financial, we strongly believe in the legacy of the family business. We also believe it should be a level playing field and the sale of a business to a family member should be taxed as a capital gain.
OUR POLICY WORK
We believe in working with like minded partners and organizations who share our belief in ensuring businesses looking to transfer assets have a level playing field to do so.
Park Place Financial worked with the Peterborough Chamber of Commerce for a policy resolution to be created to reflect our desire to adjust the Federal Income Tax Act.
In September 2019, the Canadian Chamber of Commerce passed our policy resolution at their annual convention. We will continue to work with the federal government and like minded organizations to ask for changes to the Federal Income Tax Act.
A copy of the resolution sent to the Canadian Chamber of Commerce for its policy proposals at the 2019 National AGM can be found here.
JOIN OUR EFFORTS
If you would like to learn more about our efforts or hear how you can do more, give us a toll free call at 866-285-7772 ext. 205 or email