A private member's bill that will reduce the amount of taxes paid by someone selling their farm or business to a family member was recently approved by the senate.
Bill C-208 was re-introduced by Brandon-Souris MP Larry Maguire last February, and it amends the federal income tax act by reducing the amount of taxes paid by those selling their farm or business to a family member.
Maguire says this bill was originally introduced in 2017.
“Mr. Caron, the interim leader for the NDP brought it forward in 2017, but he wasn’t successful in the last election, and I was drawn early to be able to bring a private members bill forward, and I discussed it with him, and brought it forward again to make sure we could get it reintroduced in the House of Commons.”
Right now 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, but 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 lets the seller use their lifetime capital gains exemption.
Maguire says this bill makes things fairer for people who would want to buy a farm or businesses from their family.
“All it does is level the playing field. There’s no big advantage for anybody in this it just levels the playing field for your family members as opposed to selling to a stranger.”
Over 95 percent of Canadian farms are owned and operated by Canadian farm families.
