This has been a long and winding road. In October 2017, Finance Minister Bill Morneau announced — as part of a retreat from his much-maligned private corporation proposals — that the government would work with family businesses to make it more tax-efficient to transfer a business to the next generation. In fact, two private members’ bills had already tried to do exactly that and accommodate transfers to children and grandchildren.
The government continued to dither and so the torch was passed to Conservative MP Larry Maguire. He cut-and-pasted the previous bills with virtually no changes and introduced the bill a third time. This time it passed. Though the government opposed the bill because it included no safeguards against abusive tax avoidance, it allowed a free vote. All opposition party MPs voted in favour, as well as 19 Liberals.here June 29, the poorly-drafted bill created a new high-octane tax avoidance scheme.
What was the government to do? It had allowed a deeply flawed bill to become law. But an election is on the horizon and the Liberal Party needs all the small business votes it can get. Its response was political gamesmanship at its craftiest.
There is in fact nothing to “clarify.” Under Canadian law, the bill came into full force and effect the day it received royal assent. It is now the law of the land. So, to translate the announcement from political-speak to English, the government intends to repeal a law that was just approved on a bipartisan basis by the House of Commons. And Finance officials will draft a new set of rules to replace what Parliament enacted.
Rich get richer, poor get poorer. Being able to pass things down tax free to other humans (family or not) does not make for a good society. It makes for a good monarchy.