The Insurance Brokers Association of Canada (IBAC) has praised the government’s passage of a bill that eliminates tax penalties for the inter-generational transfer of family-owned businesses, such as insurance brokerages.
Bill C-208, introduced by Manitoba MP Larry Maguire, aimed to amend the Income Tax Act when it comes to the transfer of small business to siblings. It was passed yesterday, June 23, 2021.
IBAC issued a statement showing its support for the bill’s passage.
“This is a big day for family businesses. I want to commend and thank MP Larry Maguire for his tireless work in moving this legislation forward and levelling the playing field,” said IBAC CEO Peter Braid in a statement. “For too long, family-owned businesses, including insurance brokerages, have been unfairly penalized for wanting to transfer their operation to a family member.”
IBAC also noted that it had always been a staunch supporter of Bill C-208. Earlier this year, Braid and IBAC president-elect Robyn Young presented to the Standing Committee on Finance, encouraging MPs to support the bill. The association also recently sent a support letter to senators on the Standing Senate Committee on Agriculture and Forestry, as the bill also affected transfers of family-owned farm businesses.
Prior to the bill’s passage, a business sold to a family member was considered a dividend. But if the same business was sold to an outsider, it would be considered a capital gain and thus be eligible for a capital gains exemption, leading to a lower tax rate for the seller.
“Family-run brokerages are pillars of the community and the lifeblood of the local and national economy. They serve and support their communities in good times and bad by creating employment and donating time, money, and other resources,” said IBAC president Kent Rowe. “We need to ensure that parliamentarians across Canada do more to support small businesses and remove the barriers that hold them back.”