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Owners of family businesses will gain new tax advantages from a bill that has just passed and is expected to come into effect shortly.
Currently, selling your business to a complete stranger gives you tax benefits that you would lose if you sold to a family member. Bill C-208 extends these benefits to cases where shares in an active business are transferred to a company that is owned by a child, grandchild, or sibling. The sale of shares would now be treated as a capital gain instead of a dividend, meaning you would be taxed at a lower rate and potentially be eligible for the lifetime capital gains tax exemption.… [Read more]
When your business is thriving, and you make more money than needed to cover your personal expenses, this is the time to consider incorporating your business (transferring your business to a company).
From a purely tax perspective, you do not want to be taxed on all your business income in your personal name. You are taxed more than 25% on the income from your business (It gets higher as you fall into higher income brackets), whereas your corporation will only be taxed 12% for the income earned in the corporation. That is a massive difference in dollars available for you to expand your business.… [Read more]