The Canadian Federation of Independent Business is disappointed the federal government hasn’t made any amendments to its proposed changes to capital gains taxes, which, if passed, take effect on June 25th. The federal government stated when the budget was released that the capital gains inclusion rate will be increased from one-half to two-thirds for capital gains of over $250,000, and on all capital gains for corporations and most types of trusts.

The CFIB says in a news release, business owners are worried about the new two-thirds inclusion rate, saying more than half of small business owners believe it will affect the eventual sale of their business. On the other side of things, 49 per cent of business owners believe the increase of the Lifetime Capital Gains Exemption to $1.25 million will be helpful and 77 per cent support the concept of the new Canadian Entrepreneurs’ Incentive, but only 45 per cent believe they will directly benefit from it in its current form. A news release from the CFIB says government should strengthen both of these measures and ensure all businesses, regardless of their industry, can benefit from the new Entrepreneurs Incentive.

Here is what the CFIB’s suggestions for the federal government:
-Expand the new Canadian Entrepreneurs’ Incentive to include all entrepreneurs:
-Include all sectors, including farmers and fishers selling assets
-Include non-founders to encourage people to invest in small firms
-Cut the 10-year implementation schedule in half
-Scrap the planned increase in the general inclusion rate to 66.7%. If government is unwilling to abandon this plan, it should:
-Grandfather all existing capital gains using a V-Day (valuation day) as was done in 1971
-Allow corporations to benefit from $250,000 each year at 50% inclusion like individuals
-Allow for 5-year income averaging to benefit from the $250,000 annual threshold for larger capital gains for irregular events, like selling a property