My Private Members Bill, C-208 is now at Third Reading and we only have one more hour of debate before the final vote.
As it stands, when a qualifying small business, farm or fishing operation is sold to a member of their own family, the Income Tax Act treats the sale differently than if it was sold to an absolute stranger.
There are currently two sets of rules and in some cases, it could result in the difference of hundreds of thousands of dollars.
For some that might not sound like a lot, but in many cases, it could result in a parent making the tough decision to sell their business to a stranger rather than their own children.
This is wrong and I intend on fixing it once and for all.
During my first hour of debate, I gave two examples of why Bill C-208 is needed. The first involved a family wanting to sell their bakery to their daughter.
If they sold the bakery to a stranger rather than their daughter, they would have an effective tax rate of 10% after using their lifetime capital gains exemption.
If they sold the bakery to their daughter, she would be obligated to repay their loan with personal tax dollars, which is a significant tax penalty.
The second example was a father wanting to sell his farm to his son to fund his retirement.
If he were to sell his farm to a stranger, he could use his farm capital gains exemption on the sale, resulting in a 13.39% effective tax rate.
However, if the farmer sold his farm to his son, that sale would be recorded as a dividend, rather than a capital gain, and the farmer would pay 47.4% in tax.
That is a huge difference and I think we can all agree that it is completely unfair.
We must correct this massive injustice which unfairly punishes individuals when they sell their qualifying small business or farm to their own family.
With the passage of this bill, parents will no longer have to be given the false choice of having to choose between a larger retirement package by selling to a stranger, or a massive tax bill because they sold to a family member.
Out of all the attempts made to fix this unfair tax treatment, we’ve made it the furthest in the Parliamentary process.
Let us roll up our sleeves and get this job done.
You can watch my speech in the House of Commons HERE!