New Legislation to Help Canadians Sell Family Business Without Tax
Do you have a family-owned business? Is it time to retire after years of hard work? Do you want to sell to a family member, perhaps a child or children who have worked with you to build the business?
You’ve probably been thinking about this for a few years, perhaps talked to your accountant. The exit planning news was probably not good. No matter which way you structured the sale to a family member, there was a big chunk of tax to pay. Well, here’s my quick summary of some great tax planning news!
Use Capital Gains Exemption on Sale of Business to Family
Right now, new federal legislation allows sale of a family-owned business to a corporation controlled by a family member in a very tax efficient way. What does efficient mean?
Here’s an example of tax efficiency. On the sale of a business worth $1 million, this new legislation would allow mom and dad to use their capital gains exemption to pay no tax on the $1,000,000—if their child uses corporate (not personal) funds to buy the business. Their child buying personally would end up paying closer to $1.5 million with taxes.
This is huge! The Canada Revenue Agency (CRA) does not like this new legislation, and we expect it’s going to disappear in the next government budget, likely later in 2021.
Get Info and Help Selling Your Business to Family Tax-Free
Alright, if I’ve whetted your appetite, you can read the full version of this blog here. It was produced by our talented tax department here at Field Law.
If you are selling a family-owned business to a family member, get in touch with me right now! This tax planning window will be slammed shut as soon as the CRA can manage it. Do not delay. Email me today!
The image “The word Tax written with wood blocks on top of coins piles“ by Marco Verch is used under a Creative Commons license .