While confirming the federal government’s commitment to facilitate genuine intergenerational transfers of shares, the statement also signaled the federal government’s intention to make changes “against the unintentional tax avoidance loopholes that may have been created by the Bill C-208 ”.
He highlighted a risk of “surplus stripping”, where dividends are disguised as capital gains, effectively allowing companies to take advantage of the lower tax rate without an actual transfer of the business. takes place.
To address this and other potential shortcomings of Bill C-208, the government will release legislative proposals that will be presented in a bill, which will apply either on November 1 or on the publication date of the bill. final law, whichever is later.
“We fully support genuine intergenerational share transfers and regret the recent uncertainty we have caused,” Chrystia Freeland, Deputy Prime Minister and Minister of Finance, said in the statement. “The changes we intend to make will respect the law passed by Parliament, ensure that everyone pays their fair share, and support the families and small businesses that keep our economy and communities strong.”
Canada’s National Federation of Small Business Owners welcomed the clarification.