The changes made to the Capital Gains Tax Inclusion Rate in Budget 2024 have not yet been legislated, but the damage to our economy has already begun.
As part of their plan to increase taxes, the Liberals have introduced yards of tangled red tape for small business owners to slice through to obtain a slightly lower tax burden.
The Liberals are so brazen in their contempt for small business that they dared to call this the “Canadian Entrepreneurs’ Incentive”.
The Liberals had originally proposed that in order to qualify for a lower capital gains tax rate business owners must own 10% of their company’s shares, and have worked full time at the business for the previous 5 years.
The lower rate is only available for the first $1 million in capital gains, increasing to $2 million by 2034.
Now the Liberals are amending the “Entrepreneurs’ Incentive” so that owners will qualify if they have owned at least 5% of the company’s shares for any 24-month continuous basis since the company’s founding. The owner now only needs to have worked at the business for a total of three years combined since the founding. The total earnings available for the lower rate will increase to $2 million by 2029.
Details of the update can be found here.
Having read all that, do you feel incentivized to start a business?
Should you be unable to pay the capital gains taxes when you sell your business, the government will seize other assets. Remember, none of the changes to the Capital Gains Tax are codified in law yet. If enough people and organizations are vocal in opposing the higher taxes, the government will walk it back.
One of the Parliamentary instruments available for use is the petition.
It can be downloaded at cherylgallant.com/capital-gains.