Small businesses oppose capital gains changes

Nearly three-quarters (72 percent) of small business owners say the proposed changes to capital gains taxation will harm Canada's climate for investment and growth, says data from the Canadian Federation of Independent Business (CFIB). While small businesses support some of the budget measures, the majority (63 percent) oppose the changes without critical amendments.

"The proposals in the federal budget have huge potential consequences, and many small business owners feel forced to make important decisions with little time and very few details," says Dan Kelly, CFIB president. "It is outrageous that the federal government has not yet shared draft legislation to allow small business owners and their advisors to understand the full implications of the capital gains changes." 

The budget proposes two positive changes that have the potential to benefit many owners when they sell the shares of their business – an increase in the Lifetime Capital Gains Exemption (LCGE) to $1.25 million and a new Canadian Entrepreneurs' Incentive (CEI) that will ultimately lower the inclusion rate to 33.3 percent on the next $2 million for some owners. In addition, an owner selling their shares of their business could have an additional $250,000 at the current inclusion rate of 50 percent.

"A strong majority (63 percent) of small business owners say the increase in the LCGE will be helpful to them," Kelly adds. "And while 78 percent of small business owners support the concept of the new CEI, only 45 percent feel they will directly benefit from it in its current form."

CFIB members are calling on the federal government to expand access to the CEI for all small business owners, as well as farmers and fishers selling properties and assets.

For more information, visit CFIB.