The federal government has withdrawn from its plan to implement Bill C-208, a private member bill aimed at facilitating the intergenerational transfer of small businesses and farms. Until at least November 1, 2021, owners of small businesses and farms can rely on the relief legislation for a real generation change.
Bill C-208 received royal approval and became law on June 29, 2021. The next day, the government suspended the law changes with a press release announcing its intention to postpone application of the bill until early next year, January 1, 2022. The government had previously raised concerns that the bill was in could allow unintentional and aggressive tax avoidance in some situations. At the time, it was expected that the government would use the delay period to introduce additional or revised legislation on the matter.
On July 19, 2021, the federal government reversed course and confirmed the draft law in a press release and confirmed that the changes to the Income Tax Act are now fully effective. The government confirmed that it still intends to propose legislative changes to “honor the spirit of Bill C-208 while protecting against unintended tax avoidance loopholes”; however, the changes do not apply retrospectively, as previously stated. According to the press release, changes will not apply until November 1, 2021 or the day the final draft law is published. As a result, the provisions of Bill C-208 can be relied on immediately to facilitate the intergenerational transfer of small businesses and farms.