Business groups say Ottawa’s capital-gains tax changes don’t go far enough

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The Canadian Entrepreneur Incentive will be open to people selling agriculture and fishing properties, and Ottawa watered down several other eligibility requirements

Ottawa’s moves to blunt the impact of its recent capital-gains tax changes on small business owners and entrepreneurs don’t go far enough, with many still facing a higher tax burden when they sell their companies, business groups say.

This week’s tweaks to the CEI program show the Department of Finance is open to suggestions from its critics. It scrapped the requirement that someone must be company founder to be eligible for CEI benefits and reduced ownership requirements. It also doubled the pace at which the program will be rolled out, with the incentive increasing by $400,000 a year instead of $200,000, and reaching the full $2-million incentive level by 2029.

It is “unfair and deeply disappointing that the government didn’t open it up to every sector of the economy in the same way,” Mr. Kelly said. “It does not appear that incorporated physicians will be able to benefit from this incentive,” CMA spokesperson Elena Gabrysz said in a statement. She said the association is pressing the government to tax capital gains earned by professional medical corporations at the old 50-per-cent inclusion rate for gains under $250,000, similar to the rules for individuals.

“It will benefit some farmers, but most farmers are still in a worse off place than they were before with the 50-per-cent capital-gains inclusion rate,” said Kyle Larkin, executive director of Grain Growers of Canada. He noted that grain farmers tend to own large parcels of land whose value has gone up significantly. That creates large potential capital-gains liabilities if the farm is sold or passed on to the next generation.

 

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