The Liberal government is making some changes to the capital gains tax exemption applied when a business owner sells their shares, but advocates say it doesn’t go far enough.Prime Minister Justin Trudeau, Deputy Prime Minister and Minister of Finance Chrystia Freeland and cabinet ministers pose for a photo before tabling the federal budget on Parliament Hill in Ottawa on Tuesday, April 16, 2024.
The budget also announced a reduction in the inclusion rate when an individual sells shares they own in their business. Dubbed the 'Canada Entrepreneurs' Incentive' , the exemption reduces the capital gains inclusion rate to 33 per cent on a lifetime maximum of $2 million.No spike in cottage, investment property sales as new capital gains rules take effect
The amount of time an owner has to be active in the day-to-day operations of their business in order to benefit from the exemption has been reduced from five years to three. "The tweaks to the CEI announced fall short of addressing the harm caused by the government's tax plans on Canada's innovation economy," Benjamin Bergen, president of the Council of Canadian Innovators, said in a media statement.
Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said the changes to the exemption were "good moves" but didn't go far enough. "Patchwork approaches and fragmented incentives won't deliver the economic growth and support that Canada's grain farmers and rural communities need," the organization said in a media statement.