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Results: 46 - 60 of 131
View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2021-02-01 11:05 [p.3797]
Mr. Speaker, for those who may not know, the city of Joliette, for which my riding is named, was established after Barthélemy Joliette built a mill on the bank of the L'Assomption River. At that time, the city was named L'industrie, which cleary shows the importance of entrepreneurship for our regional county municipality and for the northern Lanaudière region.
I already knew that before I was elected in 2015, when my riding was booming both socially and economically. However, I have heard from many entrepreneurs about how difficult it is to transfer their business to their children, since it is less profitable than selling it to a stranger. That is unbelievable. The Bloc Québécois and I are obviously in favour of Bill C-208. We have been working on this issue for many years. In fact, my colleague from Pierre-Boucher—Les Patriotes—Verchères introduced a similar bill in the previous Parliament.
If this bill were to pass, it would have a very significant impact on Quebec. Nearly one-third of Quebec's SMEs were buy-outs, whereas that number is one-quarter for Canadian businesses. According to Marc Duhamel, a professor at Université du Québec à Trois-Rivières, the rate of business buy-outs in rural areas is around 45%. Helping the next generation of business owners would be good for Quebec, and when something is good for Quebec, the Bloc Québécois votes in favour of it.
I also know that these changes will be good for my region. My riding has numerous farms in practically every one of its municipalities, including places like Saint-Thomas, Rawdon and Saint-Ambroise. We all know a farmer, and we are proud to support our local producers in our farmers' markets, grocery stores and even the little stands we see on pretty much every major roadway.
Right now, the crux of the issue is that a business transferred to a family member is treated as a dividend, not a capital gain, unlike a business sold to someone at arm's length. People who want to sell their small or medium-sized business or their farm or fishing operation to their children are not entitled to the lifetime capital gains exemption, but if they sell to a third party, they are.
I get that the government wants to prevent potential fraud and tax avoidance, but this situation complicates the lives of everyone who genuinely wants to take over the family business. This is like asking people to slow down to 80 kilometres per hour because some people are speeding along at over 130 kilometres per hour. The government should fix this situation by allowing transfers to family members. If a transaction is fraudulent, the government can investigate it, kind of like how a police officer would ticket someone speeding on Highway 50, but would let everyone who obeys the speed limit carry on.
Speaking of tax avoidance, there are other much more concerning cases. Here are three examples the government should tackle. First, the government should immediately start taxing web giants doing business in Quebec and Canada. Second, web giants' digital services should be subject to GST. Quebec already collects QST from them. These two measures have been announced, but they should be implemented right away. Third, the government should shut down the tax haven loophole. That was my goal in 2016 with Motion No. 42.
This is a serious problem, and many people in my riding are suffering as a result. Year after year, I meet entrepreneurs who are looking for someone, the next generation, a young person, to take over the family business. Rather than taking examples from my own family, among my uncles, aunts and cousins, let me give an example that illustrates how ridiculous this situation is. I will tell you about Charles, who went to high school with my assistant.
I have met Charles a number of times since my first election campaign in 2015. Ever since he was old enough to work, Charles has been toiling in his family business, a great sound, multimedia and lighting services company, the kind you often see at festivals, fundraisers and community events in the Lanaudière region and beyond. Not too long ago, Charles and his business partner bought the company. However, the family member who owned the business would have been better off selling it only to the partner, who was already working for the business, rather than including his own son in the transaction. How is that right?
Another incongruity has to do with selling to a competitor, which would actually be more profitable than selling to the next generation, the ones who know the distributors, the customers, the activities and the local reality. This would reduce competition in the sector, possibly increase the price of services and cause the loss of local expertise.
Unlike many other businesses that have no choice but to close up shop because of tax regulations, that SME was able to keep running back home in Joliette. If I open my curtains, I can see it from my window. I could talk at length about the problems facing this industry and even more so now because of the wide-scale cancellation of activities. However, that is not what this bill is about.
I would point out that the Canadian Federation of Independent Business, the CFIB, would like to see this bill pass, which is only natural.
There are many reasons we need to keep these SMEs in the hands of the next generation. First, this would allow several regions to develop their industry. We need to fix this problem for all SMEs, but even more so for businesses in the fisheries and agricultural sectors. In Quebec and in the regions, fisheries and agriculture are among our biggest industries.
Things are looking rather bleak when it comes to the next generation taking the reins of SMEs in the future. Statistics show that in 2016, fewer than 25% of farms had secured a successor and that rate has remained the same since 2011.
Between 500 and 800 young farmers are taking over a farm each year, when in fact 1,000 are required to maintain the number of farms in Quebec. Roughly one farm a day is disappearing back home.
In the fisheries sector, there are three major obstacles to the acquisition of a business. Léa Richard, of the Comité sectoriel de main-d'œuvre des pêches maritimes, said the following:
...what is truly difficult for this next generation is access to financing, the transfer of licences and the administrative complexity. These are the three elements that make it difficult for the next generation to acquire a fishing business.
We know that it is already difficult to take over a business. It is that much more difficult in sectors that require a sizeable capital investment. For these people who have poured their heart and soul into their business, which most of the time represents their retirement nest egg, it seems unfair that it costs them an arm and a leg to sell their business to their children.
It is difficult for people to go into business and later to let go of what they have spent most of their life building. If we could at least make it easier for them to sell their business to a family member, that would be a good thing.
The government will probably remind us that we need to make choices and that this measure comes at a significant cost. In fact, the Parliamentary Budget Officer reviewed a similar bill in 2017 and estimated the cost at about $376 million. To put that in terms the Liberals will understand, that is equivalent to a little more than one-third of a contribution agreement with WE Charity, or about 40% more than the sole-source contract awarded to Frank Baylis.
This measure may be costly, but it is nothing considering how much the next generation could help business owners. Losing a business is hard on the owners, but the impact of that loss ripples beyond the owner and their loved ones. Suppliers, creditors, employees and customers lose an important partner. We often think about how the closure of a large company can have repercussions on a region, as was the case with Electrolux a few years ago in Assomption, near my riding. However, we rarely consider that the loss of multiple small businesses can have a less immediate but equally serious impact on the socio-economic fabric.
Ensuring the succession and continuity of SMEs is not only good for our economy and governments' fiscal capacity, but it is necessary for efficient land occupancy. From the North Shore to Abitibi, from Gaspé to Nunavik, Quebec has chosen to have vibrant regions, each with its own strengths, growth sectors and educational institutions, such as CEGEPs. According to Maripier Tremblay, an associate professor in the department of management in Université Laval's faculty of business administration, “Quebec's economy depends on its SMEs, but also on its regions. It is very important for businesses in the regions to retain their pools of workers.”
I will close by saying that to have strong regions, we need to have people living there. For the period from 2014 to 2023, the Board of Trade of Metropolitan Montreal estimates that between 79,000 and 140,000 jobs in our SMEs could be lost due to the entrepreneurial deficit. That is a gigantic number.
That is like one or two whole ridings of workers disappearing in 10 years. When many families leave a region, it has significant consequences for the entire ecosystem.
View Gord Johns Profile
NDP (BC)
View Gord Johns Profile
2021-02-01 11:16 [p.3798]
Mr. Speaker, many in this country are away from their loved ones, so before I get started, I note that today is my oldest daughter's 21st birthday. She is on the other side of the country, but I wish Maddie a happy 21st birthday and give her lots of love from everyone here at home.
It is always an honour to rise on behalf of the federal NDP to fight for small business. We know that small business owners are the job creators. Right now they are are creating 80% of all new jobs in our country. Bill C-208 is very important for supporting small businesses and local communities and for stopping the economic leakages from small communities in our country. These leakages often end up in the hands of large corporations because of flawed and broken tax rules that create a benefit for selling a business to those at arm's length versus a family member.
I want to thank the member for Brandon—Souris for reintroducing the bill, which shows that there is non-partisanship when it comes to supporting it. As members are well aware, the bill was first tabled as Bill C-274 by the former NDP finance critic and former member from Rimouski, Guy Caron. He fought hard, as the New Democrats continue to do, for small business.
I want to talk about what Bill C-208 would mean for small communities. We know that owners of small businesses, such as family farms and fishing businesses, as in the communities around where I live in coastal Canada, are often selling their businesses to family members. Specifically, the bill would give business owners the same rights they would normally get if they were selling to someone at arm's length. This is important, because nobody should be penalized for selling a family business to a family member, but it is happening now with the current taxation system. The bill is very important to us, and we are excited to be speaking in support of it given what it would mean to rural communities.
I cited the importance of small business for job creation. If people see a barrier to selling to someone at arm's length and will pay more tax, they will do everything they can to pay less tax. With the current structure, for example, if a person sold a family business worth $1 million to a family member, they would end up paying a dividend tax rate of about $350,000. However, if a person were to sell that same million-dollar business to a stranger, someone at arm's-length, they would end up saving $306,000 of the tax they would have paid otherwise. It makes absolutely no sense.
We want to encourage people to keep businesses in the hands of family members and encourage intergenerational business ownership, because we know that it keeps money and profits in our communities. For example, in fishing, if a person were to sell a family fishing operation to someone in their family, they would keep the quota and the jobs in the family. However, if a family member had to pay more tax, they would be more likely to sell to an international company or large conglomerate, which would hoard fishing licences and then lease them out to fishers. The same applies to farmers. Profits then leave the community at the end of the day, which is a huge economic leakage. The money is leaving the community and leaving our country in many cases, and this needs to stop.
Mr. Caron's bill tabled in the last Parliament would have supported small businesses, farmers and fishers, but it was defeated by a margin of only 12 votes. It was voted on after the government misled Parliament. The government cited that the fiscal losses would be up to $1.2 billion, but the PBO put the fiscal revenue shortfall between $126 million and $249 million. That is quite a gap. The Liberal government could have stated what it would have cost Canadians taxpayers to do the right thing to help support the sale of intergenerational businesses by not making them pay more, but instead it said the loss would be an astronomical amount of money. In fact, the PBO's numbers were somewhere between 10% and 18% of what the government had initially cited, which is a big gap.
The cost of the economic leakage and its impact on small communities across our country, and on family members, is worth the price of what we are going to lose in the long run, as we see those profits leave our communities.
We are heading into a huge period of succession in our country. A lot of small business owners belong to an aging demographic. People want to sell their businesses to their family members and keep the ownership in the community, which I assume we want to encourage. We expect over $50 billion in farm assets alone to change hands over the next 10 years, so we are heading into a huge period of succession. For farming alone it is critical that we fix this now, because we have lost 8,000 family farms in the last decade. We need to do everything we can to curb that trend because it is obviously not working for Canadians. Only half of those small business owners actually have a succession plan, while 76% of them are planning to retire over the next decade.
That is important for a lot of people who have developed and built businesses in their families. I had a business for many years. When I started it, I was not informed that if I were to sell my business to one of my three children I would be penalized with a heavy tax bill. If I sold it to someone at arm's length, I would not have incurred that same tax. It makes absolutely no sense, but most Canadians do not know that this is the current situation.
This is something we need to remedy. I hope that the government will talk about the real numbers that the PBO shared. We saw some Liberal members support the opposition in the last Parliament, so I am hoping those Liberals who decided to vote with their government's misleading information will actually support the PBO and do the right thing to support their communities and small business owners, especially those family businesses that want to maintain intergenerational ownership. In rural communities such as Courtenay—Alberni, where a large part of our main street is made up of local or small businesses, this is a really important piece to our long-term survival. We want to encourage local ownership.
Again, this bill did not pass based on misinformation in the last Parliament. The Liberals continue to make excuses on this bill. They say they will relax the rule for tax avoidance, but we want it to be done carefully to avoid these difficulties and challenges of people avoiding tax rules. If the purchaser or family member retains the shares for five years, the Canada Revenue Agency's concern is that, in the absence of a specific provision, the shares would pass from one family to another. If that five-year provision were in place, it would make that impossible. We want to make sure that we take all the excuses away from the government and alleviate the concerns of taxpayers, so that there are provisions and a system in place to protect against flipping these businesses to avoid paying taxes. This is to keep them in the hands of small business owners.
According to a 2012 CIBC study, close to 30%, or 310,000, business owners were planning to exit ownership or transfer control of their businesses by 2017, in one year alone. We do not have the recent figures. That means that a lot of businesses are changing hands right now.
I want to talk about economic leakages, because we are seeing more businesses being sold and ending up in the hands of large conglomerates. We constantly see local ownership being reduced. This kind of taxation creates a threat to local communities. We want to invest in small communities, and this is a very good way to invest in families and small communities.
Returning to closing economic leakages, we need to do everything we can. This legislation is important, but we also need to make sure that the big banks pay their share, that we cap merchant fees and that we continue to take a holistic approach to supporting small businesses. This is a good bill and I hope the government will support it as well.
View Bernard Généreux Profile
CPC (QC)
Mr. Speaker, I am honoured to rise today in support of Bill C-208 introduced by my hon. colleague, the member for Brandon—Souris, to amend the Income Tax Act to facilitate the transfer of small businesses or family farms or fishing corporations.
We already knew how important this issue was when this bill was introduced for first reading in February 2020. Who would have thought that, barely a month later, COVID-19 would come along and drastically change the landscape for Canada's SMEs?
As an entrepreneur and representative of a region that consistently ranks as one of the most entrepreneurial areas in the country, I was very sad to see the latest survey that the Canadian Federation of Independent Business, or CFIB, released last week, warning that 181,000 small business owners in Canada were considering closing their businesses. That means one in five businesses could close down, despite all the programs and billions of dollars spent by different levels of government and the support services we have provided in our respective ridings.
This is a frightening prospect, since 2.4 milion jobs are at risk if the pandemic continues, which is why I want to reiterate how important it is that the government do whatever it takes to fix the vaccine supply problem. We cannot sit back and wait until 2022. After all, we are barely into 2021.
Workers in the tourism and cultural sector are very much on my mind. Last year was devastating for them. The federal government really needs to get creative with its vaccine strategy, and it needs to do it fast so we can at least hope for some degree of recovery for the sector this summer.
September is too late, and 2022 is even worse. Until very recently, small and medium-sized businesses were the backbone of our economy. They created more than 77% of all new jobs between 2002 and 2012. As a Conservative, I am very proud of the Harper government for creating an environment that helped SMEs grow by reducing the corporate tax rate from 22% to 15%, lowering the small business tax rate to 11%, and increasing the income limit for applying this tax rate from $300,000 to $500,000.
As a business owner who created nearly 30 printing and communications jobs in my region, I understand the importance of ensuring our tax system encourages entrepreneurship.
It is important to understand what motivates entrepreneurs to risk all of their savings and their financial security to set up or buy a new business. People go into business for a variety of reasons. Some are motivated by their passion, while others see a service gap in their community that needs to be filled. However, most people go into business to provide for their family, with the hope that, one day, their children will be able to take over the business and build a better future.
In my case, I intend to one day transfer my family business to my daughter, of whom I am obviously very proud. However, I was very surprised to learn that, under the existing Income Tax Act of Canada, it would be better for me to sell my business to a stranger than to a member of my own family. When a business is sold to a family member, the difference between the sale price and the original price of the business is considered a dividend and is taxable at 100%. However, if the sale is between two strangers, the difference is considered a capital gain, only half of which is taxed. What is more, in Canada, the lifetime capital gains exemption that normally applies to small and medium-sized businesses does not apply when the business is sold to a family member.
What message are we sending? Are we trying to discourage people from going to business? I am not the only one asking these questions. According to a 2012 CFIB study, approximately 310,000 business owners, or around 30%, planned to sell or transfer their business within five years. That figure jumped to around 550,000 within 10 years. The figure may have changed during the COVID-19 crisis, which makes passing Bill C-208 all the more urgent for the many family businesses whose future is at stake. It is already bad enough that so many businesses plan to hand their keys over to creditors during this economic crisis.
We must not allow the unfairness in the Income Tax Act to force so many small businesses to hand their keys over to the government. According to the Canadian Federation of Agriculture, “Over $50 billion in farm assets are set to change hands over the next 10 years”. That does not even include the more than 8,000 family farms that have already folded in the past 10 years. Just half of them had a succession plan. As the population ages, three in four farmers plan to retire in the next decade. We need to act quickly to fix this anomaly in the Income Tax Act to prepare for the demographic reality we are facing, in the agricultural sector especially.
That is why I support Bill C-208, introduced by my colleague from Brandon—Souris, and I urge the Liberals to do the same. I remind my colleagues that during the 42nd Parliament, we debated a similar bill that had been introduced by Guy Caron, the former member of Parliament for a riding next to mine. This is a unifying bill. This is not a left or right issue; it unites us all.
I would like to remind members that Bill C-274 received the support of the Conservative Party, the Bloc Québécois and the NDP, but was defeated by the Liberals, who had a majority at the time, because they heeded the advice of public servants rather than that of the people who elected them. Many organizations across Quebec support the bill. The Association des marchands dépanneurs et épiciers du Québec has spoken out against the current situation, and the Union des producteurs agricoles and the Board of Trade of Metropolitan Montreal both indicated that they supported the bill.
This issue was also brought to my attention during the last campaign, in 2019, when I met with UPA producers in Cap-Saint-Ignace, which is in my riding. Last Friday, I received an email from Andre Harpe of Grain Growers of Canada asking us to support Bill C-208.
I want to point out that the agriculture sector is following the debate very closely today. As the saying goes, better late than never. If the Liberal Party really wants to back SMEs, it must support this bill and pass it quickly because Bill C-208 will ensure that all these family businesses will continue to operate and remain intact by facilitating their intergenerational transfer. If this does not happen, a Conservative government will have no problem ensuring that it does.
I would add that with the speeches my colleagues made ahead of me, I think it is clear that the Liberals have no choice but to move forward and support this bill. In any event, they are in a minority. We will move forward with this bill. Whatever it may cost to implement it, not doing so would cost even more, because the value and pride that comes from handing down a family business is priceless. Considering that for the most part, all Canadian businesses started as family businesses, that they represent 90% of the Canadian economy, and that they are the backbone of Canadian entrepreneurship and businesses with fewer than 10 employees, it is essential that people be able to transfer these businesses to members of their own family without being penalized.
View Mark Gerretsen Profile
Lib. (ON)
Mr. Speaker, I thank the member for Brandon—Souris for bringing forward this bill. I know that private members' business can generate some good bills from throughout the House. A lot of people do not fully appreciate the amount of work that goes into private members' business, which one only knows if one has gone down that road. Just for taking the time to go through the process to bring this piece of legislation forward, and all the work that went into it, the member deserve a lot of credit.
I am pleased to take part in the debate today over this private member's bill, Bill C-208, which aims to facilitate the transfer of family businesses between family members. This is an admirable goal. Indeed, our government recognizes this important issue, as evidenced by the mandate given by the Prime Minister to the Minister of Finance and the Minister of Agriculture and Agri-Food to work together on tax measures to facilitate the intergenerational transfer of farms.
Ensuring the sustainability of small businesses, family farms and fishing corporations is essential to our economy and to the communities these businesses serve. This has been underscored by their crucial role in supporting families and communities as we continue to fight against COVID-19.
Our government understands that this is a fact. From the onset of the pandemic, through Canada's COVID-19 economic response plan, we have introduced a range of supports for small business owners to help bridge them to the other side. Simply put, we have their backs, and this extends to helping family businesses thrive for generations to come.
Encouraging the sale of businesses to family members often means those businesses will remain in and continue to benefit their communities, as well as their families, who have fought hard, sacrificed and, through pure determination and entrepreneurial spirit, succeeded. It is with this spirit in mind that Bill C-208 is to bear full and careful consideration.
Bill C-208 seeks to amend two of the Income Tax Act's most important and complex anti-avoidance rules. These rules deal with intercorporate dividends, share sales and circumstances in which the lifetime capital gains exemption is claimed. Any relieving changes to these sections of the act must be done cautiously and follow rigorous study and debate to avoid the unintentional creation of loopholes that would disproportionately benefit the wealthy, instead of protecting the middle class and those who are struggling to join it.
Section 84.1 of the act, in particular, is in place to apply anti-avoidance rules when, as appropriate, an individual sells shares of one corporation to another corporation that is linked to the individual, such as one of a family member. When the individual sells shares of a Canadian corporation to a linked corporation, section 84.1 of the act deems, in certain circumstances, that the individual has received a taxable dividend from the linked corporation rather than the capital gain.
This prevents the individual from realizing the proceeds from the sale on the tax-free basis using the lifetime capital gains exemption. This rule is meant to ensure that taxpayers cannot use linked corporations to, in effect, remove earnings from their corporations using a contract sale. Without this rule, such sales between related parties could be used to convert what should be dividends of an individual shareholder into capital gains that are tax-free under the lifetime capital gains exemption.
Bill C-208 proposes narrowing the scope of section 84.1 by removing the sale of certain shares of small businesses, family farms or fishing corporations from its application when being sold by an individual to another corporation that is owned by their adult child or grandchild. This change would allow the owner-operator of a family business to convert the dividends of the corporation into tax-free capital gains.
In order to better illustrate how this would work, I will use an example. Let us say Darryl and Emily own a potato farm in P.E.I., which has grown to be a major regional supplier. After decades of hard work, they are now planning their retirement and want to pass down their business to their two adult children, both of whom already own successful small businesses in the community.
By applying the proposed amendments in Bill C-208, Darryl and Emily would sell non-voting preferred shares from their farm corporation to the two corporations controlled by their children. In doing this, they could claim tax-free treatment of the resulting capital gain from the sale under the lifetime capital gains exemption in a manner that allows the sale to be financed by the sold corporation's own assets without relinquishing control of the farm corporation.
View Mark Gerretsen Profile
Lib. (ON)
Mr. Speaker, I thank the Bloc member for raising that point of order.
Bill C-208 also proposes amendments to section 55 of the act, which generally applies to corporations that seek to inappropriately reduce capital gains by paying excessive tax-free dividends between corporations, which the act considers to be a capital gain.
Two exemptions to these anti-avoidance rules authorize businesses that are restructuring to allow company shareholders to split company shares between them while deferring taxes. The first exemption applies to the restructuring of related corporations, and the second applies to all corporate restructurings. Bill C-208 would broaden the first exemption so that it applies to brothers and sisters, despite a standing long-term tax policy that considers brothers and sisters to have separate and independent economic interests for these purposes. Any changes to this exemption could risk eroding the tax base.
Spouses, as well as parents and their children, are already eligible for this exemption because it is presumed they have shared economic interests. Although brothers and sisters cannot restructure their participation in a corporation on a tax-deferred basis under the related corporation's exemption, they can do it under the second exemption of section 55, which applies to all corporate restructurings. This is called the butterfly exemption, and there are fewer tax avoidance opportunities under it.
If the proposed amendments of section 55 included in Bill C-208 were passed, siblings could undertake business restructurings in which otherwise taxable capital gains realized between corporations would be converted into tax-free intercorporate dividends. This would create new opportunities for tax avoidance.
In conclusion, these are important considerations to take into account when reviewing the merits of Bill C-208. Our government remains committed to working with family businesses, including farming and fishing businesses, to make it more efficient, or less difficult, to hand down their businesses to the next generation. However, we must exercise caution to not create loopholes and opportunities for the wealthy to use private corporations for tax avoidance purposes. This would dilute our base protection of anti-avoidance tax rules. Moreover, this would create a tax system that caters to the wealthy at the expense of the middle class.
View Xavier Barsalou-Duval Profile
BQ (QC)
Mr. Speaker, today's debate is about Bill C-208, an act to amend the Income Tax Act with respect to the transfer of small business or family farm or fishing corporation. This is a very important issue, and I am concerned about the government's ongoing failure to take action on it. This problem comes back year after year, and it has still not been resolved.
In Quebec, one in three SMEs is a buy-out. That means that one-third of Quebec's small businesses were existing businesses bought by someone else. That is a big deal, yet the government penalizes people who want to transfer their business to a family member. In 2018, it was estimated that 30,000 to 60,000 Quebec businesses would not find a buyer in the years to come, yet the government is actively penalizing people who want to buy out the family business. It would rather those businesses disappear or be sold to strangers. That is just great.
In the agricultural sector, Quebec is losing one farm a day. We know this, we talk about it and we speak out against it. The fishing sector is no different. Fifty years ago, fisheries were flourishing in the regions, but today, fishing villages are disappearing one after the other. This is sad, but it is partly due to inaction by this government and, obviously, governments before it.
During my previous term, from 2015 to 2019, I introduced Bill C-275 to address this issue by allowing family businesses to be transferred to members of the same family. I was made aware of this issue by some of my constituents, including Mr. Tremblay, from Armoires Tremblay in Saint-Mathieu-de-Belœil. Mr. Tremblay was in his 30s and his father owned a small, family-owned cabinetmaking business. His father wanted to retire and was waiting to sell his business to his children, in the hopes that one day the act would be amended and allow him to do so without being penalized.
Right now, the government assumes that people who sell their business to their children are fraudsters. It thinks that they will not set the price at fair market value, so it decided to tax the entire profit generated by the transaction. The problem is that a small company can quickly grow to be worth one, two or three million dollars, even if it does not employ a million people, but rather three, four, five, six or 20.
We cannot ask young people who want to take over from their parents to withdraw two million dollars from their bank account. Very few people in their twenties and thirties can withdraw one million dollars from their bank account. That is the problem. The government thinks that people who sell their business to their children are fraudsters because they will give them a better price.
That means that they will not be able to sell unless they sell to strangers. Businesses will have to close because there will be no one to take the reins. It is really frustrating to see how the government refuses to recognize and resolve this problem year after year.
Not so long ago, I was discussing this with an old school friend, Marc-André Daigneault. His parents have a company called Revêtement RJ. The same thing happened to him. His parents wanted to wait to sell their company in the hope that the rules would one day change. He is saddened by the fact that young people cannot take over their parents’ companies because the government does not want to modernize and change the legislation.
At the time, I had tabled a bill that was similar to Bill C-208. The NDP found the bill so appealing that it decided to copy it, and the former NDP member for Rimouski, Guy Caron, tabled it himself. I would not want to take all the credit for the bill, because this is something the Bloc Québécois has been fighting for for 15 years. As early as 2005, a Bloc Québécois member introduced a bill seeking to address the problem of passing down family businesses from one generation to the next.
I am an accountant by training. In my university years, when I learned the tax rules and understood that people could not pass a business down to their children—well, it is possible but very disadvantageous from a tax perspective—I was really frustrated and could not get over it. All of my classmates and professors agreed with me. If we visited a tax school, an accounting office, a lawyer’s office or any university and asked an accounting or tax professor what they thought of this, they would tell us that it makes absolutely no sense. Unfortunately, the government is digging in its heels and preventing family businesses from being passed down to the next generation.
In June 2015, however, the Liberal member for Bourassa introduced a bill concerning the passing down of family businesses. He said that it was his first bill and that it was extremely important. That was in June 2015. When the Liberals came to power in October 2015, just a few months later, they were suddenly against it. It seems that the Liberals promise all sorts of things when they are in the opposition but do not follow through when they get to power .
As my colleague from Rivière-du-Loup pointed out earlier, this is not a partisan approach. My Conservative colleague said he thinks transferring family businesses is important. I mentioned my NDP colleague earlier. I do not know the Green Party's position, but I know a lot of Liberals are not happy with their party's position and agree that it is ridiculous, so much so that the government now finds itself in an awkward position.
We have seen several economic updates and budgets since 2015. The government said it would tackle the problem and try to fix it. Now here we are in 2021, and it is still not fixed. The Bloc has been fighting for this since 2005. This is unacceptable.
There are solutions, however. The government is going to tell us that we would be opening up loopholes, but our tax law is full of loopholes. People use tax havens, and the government does not go after them, but it prevents the transfer of family businesses. How does that make any sense?
The government says that it is impossible, but we have tabled a number of bills to resolve the problem. In 2016, Quebec's Minister of Finance announced a solution to the problem in his budget. Since January 1, 2017, four years ago, Quebeckers have been able to pass down their business to their children without a tax penalty, but the federal government is unable to do the same. We do not know why, but it cannot do it. I think that the problem is stubbornness more than anything else.
Let us examine this question more in depth. The capital gains deduction in 2021 is $892,000. That means that you can sell a business you spent your entire life building without paying income tax on the first $892,000. It is similar to the sale of a tax-exempt home.
We also know that people with small businesses often do not have an RRSP. They pay themselves dividends or a small salary, and they have just as much as they need to get by. I am thinking about the neighbourhood mechanic or your local farmer. Often, they do not have any money put aside because they put everything back into the business. When they come to retire, they are very happy to have the $892,000, because retirement is expensive, and they need enough money to last the rest of their lives.
Unfortunately, the government does not allow them this $892,000 if they sell their business to their children. Selling their business to a stranger gets them an $892,000 deduction, but they have to pay tax on that amount if they sell to their children. Even worse, the tax payable on capital gains is normally half the amount. If they sell the business to their children, they have to pay income tax on the profit as if it were ordinary income or a dividend.
It boggles the mind that the government insists on voting against the bill when it is well aware of the problem, when we have been telling it for years, and when a number of bills have been tabled to resolve the situation. I try to understand, but I cannot. That is why I am very pleased that we have a minority government today and that, with the three opposition parties, we will be able to pass the bill.
View Larry Maguire Profile
CPC (MB)
View Larry Maguire Profile
2021-02-01 11:56 [p.3804]
Mr. Speaker, it is my privilege to be here in the House today. As I said on November 25, “it truly is a humbling moment to stand in this chamber and put one's name to legislation and ask one's colleagues to support it.” That is an extremely important part of private members' bills and it has been recognized by my Liberal colleague today, and I thank him for his comments as well. I will refer to that in a moment.
I want to thank my colleagues in the House for supporting this bill on small businesses and the idea making it fairer for people to sell their business to their own family members directly, as opposed to selling it to a complete stranger or a third party that they may not have any connection with.
The bill and the bipartisan support I have seen in the House are tremendously important. Here I want to congratulate my former colleague, the interim leader of the NDP, Mr. Guy Caron, for bringing this bill forward to start with and for the support of the Bloc, which a couple of speakers have pointed out here today, as well as in the first hour of the second reading of the bill on November 25.
This legislation impacts every corner of Canada. It impacts every one of us in the House, all 338 of us. We all have small businesses in our ridings and I want to refer to the words “small businesses”, as some of my colleagues who have spoken today have addressed the fact that this is for small businesses, not big businesses. There is a huge difference that I want to point out to my colleagues in the House, and they know that.
The bill refers to family operations in fishing, farming and other small businesses in Canada that have been built on the pride of ownership and the hard work that their families have done throughout Canada, and it in no way is trying to provide any kind of loopholes. In fact, the bill is very clear and has gone to great lengths, which Mr. Caron and I have studied, to make sure that its wording will not allow those types of situations. As I said, it would be pride of ownership for people to be able to build a small business into a larger business, but once they do that, the things we are talking about in this bill are not relevant to those businesses.
The outcome of bill will have very little impact on the government, as my colleagues have pointed out today. It will have very little financial impact on the federal government, but a huge impact on the currency that is available through small businesses to every region of this country, particularly during this pandemic. All small businesses are struggling. It is not their fault, but they are struggling right now and the bill would go a long way toward helping all of them alleviate some of the stress and strain of being able to hand their business directly down to their own son, daughter, granddaughter or grandson. That is whom this applies to. It is very narrow in its scope in that way.
It is inherently unfair for small business persons to pay disproportionately higher taxes if they sell their operation to their own children than if they did to a complete and absolute stranger. We have referred to the difference between selling to their family as a dividend, or to a stranger as a capital gains exemption, which amounts to a difference of hundreds of thousands of dollars to small businesses.
In making this change, it will allow the next generation to become business owners and to be able to carry on those businesses and to keep jobs in their local areas. Moreover, the funds the younger generation provide to the older generation are generally used for retirement, because a lot of funds that are earned during the small business development are going into the business to keep it afloat and expanding so that they can have that pride of ownership for their families in the future.
I want to close by asking all members to support Bill C-208 to encourage small business development in our country.
View Garnett Genuis Profile
CPC (AB)
Mr. Speaker, going back to the last Parliament and the debates we had at PROC, my friend has heard me speak on these subjects for 10 hours at a time, so I am sure he will not mind an additional question.
He mentioned facilities on the Hill and recognizing the presence of young women with children. I want to observe that men also have children and that this is a live issue for young fathers as well. It is important to note that this is a balance that both male and female members of Parliament are often trying to strike.
Following up on his comments on the unanimous consent issue, it is interesting to me that members are speaking about the use of unanimous consent during this debate on the Standing Orders. All it would take is for one of those members to commit to consistently opposing all requests for unanimous consent and to say so. Of course, the member who did that would have to commit to saying no in every case, including in cases where the cause put forward through a unanimous consent motion was a popular one.
I am curious to know from the member if he is prepared to take that position—
View Maninder Sidhu Profile
Lib. (ON)
View Maninder Sidhu Profile
2021-01-26 10:53 [p.3508]
Madam Speaker, I would like to start off by wishing my colleagues a very safe and happy new year. The COVID-19 pandemic has put unprecedented stress and hardship on Canadians, from small business to long-term care homes and front-line and essential workers. Every Canadian has a story to share of how this pandemic has impacted them. Constituents in my riding of Brampton East are concerned about their businesses, the safety of their workers or simply when they can pay a visit to loved ones they have not physically seen in months.
For said reasons and countless others, the federal government has committed to the implementation of a strong and robust recovery plan presented by our finance minister through the fall economic statement. Our government's message is clear: We will do whatever it takes to protect the health and safety of Canadians for as long as it takes.
This message extends to our commitment to strengthen the economy by creating one million good jobs, investing in training and skills, creating valuable opportunities for youth and investing in green technologies to help combat climate change. This is a critical component in providing Canadians the support they need in Bill C-14. The economic statement implementation act would help put into action what the fall economic statement set out to do, which is supporting middle-class families, helping students manage their debt and investing in resources that will help better protect Canadians and the economy.
Amendments to the Income Tax Act will mean that families entitled to the Canada child benefit will receive additional temporary support of up to $1,200 for each child under the age of six. Families have had to transition their entire household routines in order to accommodate more time being spent at home, which means facilitating extra child care, buying additional school supplies to aid in virtual learning or simply helping with the cost of raising a family.
Throughout 2020, our government saw that families needed our help, which is why we stepped up to provide an extra one-time $300 payment in May and increased the Canada child benefit payment amounts in July. The proposed temporary $1,200 support for families is an increase of almost 20% over the maximum annual CCB payment. Our goal for a stronger and more resilient middle class involves ensuring that families have the resources they need in order to help nourish and support their children's futures. This plan includes a Canada-wide early learning child care program that will help ease the burden of arranging affordable child care. We know that this pandemic has disproportionately affected women. Doing better is not simply a choice, it is a responsibility that this government takes very seriously.
We will continue to support Canadian students. Our government plans to eliminate the repayment of the federal portion of the Canada student loans and apprenticeship loans from April 2021 to March 2022. Students in Canada can feel a sense of relief once these measures are in place to help them manage their student debt. This investment will help 1.4 million Canadian students who are trying to achieve higher education and ultimately begin their careers. I have listened to their experiences. I know that this support is essential. By easing the federal interest portion of student debt, we are allowing students the opportunity to focus on working toward their career goals and not being worried about incurring additional debt.
We also provided financial support to post-secondary students and recent post-secondary and high school graduates who were unable to find work last summer due to COVID-19. Eligible students received $1,250 for a four-week period for a maximum of 16 weeks between May 10 and August 29, 2020. Those with a disability or dependants also received an extra $750.
Most post-secondary students in my riding were unable to access the Canada emergency student benefit and are very positive toward our government's support for students, including the doubling of the Canada student grant amount to a maximum of $6,000 in response to the increased need for the 2020-21 school year.
Our government is actively creating opportunities for youth, whether that be through the investments of over $300 million into the Canada summer jobs program or the youth employment and skills strategy investment. These investments help young Canadians gain practical experience and make meaningful connections in the workplace. Students need our help. They have adapted to new learning methods and have overcome tremendous adversity during these troubling times, which is why our government is here to lend a helping hand.
The COVID-19 pandemic has put immense strain on our health care systems. The amendments made to Bill C-14 mean that we can help better protect those most vulnerable, like seniors, by investing through the new safe long-term care fund. This funding will help prevent and manage outbreaks in long-term care homes, which will ultimately help save lives.
The heartbreak and fear that many Canadians have felt knowing that they have a loved one living in a long-term care home or, God forbid, losing someone to the virus are all too common. We will also be establishing a new national standard for long-term care facilities to ensure that none of our grandparents, parents, aunts, uncles or friends must endure a substandard level of care. No person deserves that. Amending the Food and Drugs Act means that we can increase our investments in order to support access to virtual health tools, mental health supports and substance use programming.
Asking Canadians to stay at home can impact the mental health of so many. Restricting social interaction for long periods of isolation and job anxiety can take a toll on people's mental health. As the government, we want to make sure that every Canadian has access to the supports they need.
As we begin this new year, there is a great sense of hope among Canadians. This sense of hope was created by the hard work that was put into composing the largest vaccine portfolio in the world. I was excited to hear that all the long-term care homes in the region of Peel have received doses of the COVID-19 vaccine. As a government, we will continue to ensure that our vaccine rollout happens as efficiently as possible. We will also continue to prioritize those who are at high risk of or vulnerable to contracting COVID-19.
The amendments made in Bill C-14 under the Food and Drugs Act will help our government increase funding to support testing, vaccine procurement and distribution, as well as isolation sites. In November, the federal government, in collaboration with various levels of government, granted $6.5 million to establish an isolation centre for residents of Peel, in my riding of Brampton East, and throughout the region, to isolate safely if they cannot do so safely at home.
It is imperative that the messaging we continue to convey to Canadians is that we will support them for as long as it takes. That means including investments, such as the one proposed in the fall economic statement, which will help upkeep our efforts for medical research, countermeasures and rapid testing, and ensure that every Canadian can receive the vaccine.
Adapting to new research and trusting the science our health officials advise us on is how we can best protect the health and safety of Canadians. That is why investing in research is so critical under the presented amendments of Bill C-14.
The Canadian economy cannot function without the success of our small businesses across the country. Unfortunately, this pandemic has put an unprecedented strain on the ability of our small businesses to succeed. They account for over 90% of all businesses in Canada, and our economy cannot afford to stand back and allow businesses to close their doors. We must continue to provide a prudent fiscal plan that helps businesses stay viable and keeps employees on the payroll.
The Canada emergency rent subsidy saw over 20,000 organizations apply within the first four days of the application period. As a government, we are also cognizant of employees who have seen a reduction in their working hours or have been told not to come into work. Therefore, supports such as the Canada emergency wage subsidy have been extremely important to small businesses and their employees.
In my riding of Brampton East, I had the pleasure of speaking with various small business owners who were able to access both programs. I spoke with Mr. Dheri, the general manager of a local Turtle Jack's restaurant, who was thankful to have access to the Canada emergency wage subsidy so that he could keep his employees on the payroll. His is one of the over 350,000 small businesses across Canada accessing the Canada emergency wage subsidy program.
We want small businesses to be able to open back up once it is safe to do so. As we continue to fight COVID-19, our government will be there for Canadian small businesses every step of the way, so we can safely rebuild our economy and make us stronger than ever before.
While speaking to constituents, I have heard first-hand their concerns surrounding climate change and the state our children and grandchildren will inherit. Our fall economic statement represents actionable steps and investments to tackle these concerns. By taking steps to making homes greener and more energy efficient, Canadians can reduce their carbon footprint while lowering their energy bills.
Our government's efforts to establish a network of zero-emission vehicle charging stations across the country in convenient locations, including where we work, live and travel, will help accelerate the use of zero-emission vehicles. We will build on current investments and zero-emission vehicle infrastructure by providing an additional $150 million over three years to help ensure that charging stations are available and conveniently located where and when they are needed. This is on top of the 500 electrical vehicle charging stations at more than 250 locations across Ontario announced last year. Brampton is currently home to many electrical vehicle charging stations, and I look forward to welcoming many more.
Building back our economy requires a jump-start of investments to help stimulate growth once we get through this pandemic. As we stated in the fall economic statement in November, the federal government will invest billions of dollars over three years to help make this happen. The amendments proposed will help our government continue to make investments in resources to best manage the pandemic and support the recovery of our economy.
As I said before, there is a sense of hope among Canadians. We will continue to roll out and distribute vaccines over the coming months, and Canadians will be ready to return to a sense of normality. We must support these hopes and ensure that the economy, and Canadians' return, is adaptive, innovative and strong.
A lot of changes have happened this year due to COVID-19. Working from home has now become common practice among businesses. Students have adapted to online learning, and businesses have amplified their online capacities. The decisions and amendments that we decide on as members of Parliament will allow positive change to come to fruition. It will help us save lives, improve mental health supports, help middle-class families and create a more inclusive economy and society for all. Let us continue to move forward together.
View Christine Normandin Profile
BQ (QC)
View Christine Normandin Profile
2020-12-11 12:51 [p.3349]
Madam Speaker, I will spare members the suspense and announce right away that the Bloc Québécois will support the Conservatives' motion.
However, we will take this opportunity to further discuss ethics and the role of the Conflict of Interest and Ethics Commissioner. We will talk about what the commissioner should have the right to do, the possibility of future amendments and the suggestions that we will make to strengthen the commissioner's power, which is something he himself is asking for.
Before that, I will briefly remind members of the facts. The reason for this debate is the Conflict of Interest and Ethics Commissioner's November 19 report with regard to the member for Etobicoke—Lakeshore. In his report, the commissioner found that the member contravened subsection 20(1) of the Conflict of Interest Code for Members of the House of Commons by failing to fully disclose his private interests and those of his family members within a reasonable time even after the initial deadline was extended from January 7 to February 7, 2020.
As the first step in the initial compliance process, members must fully disclose those interests to the Commissioner within 60 days after notice of their election is published in the Canada Gazette. That is what we all had to do at the beginning of the year. We had to declare our real and potential interests by January 7.
The member for Etobicoke—Lakeshore submitted his statement, but it was incomplete. He therefore asked for an extension, as did other members, and he was given until February 7 to submit the required information. However, even with this extension and after some information was sent, his file was still incomplete. His initial statement remained incomplete and did not meet the requirements of the Office of the Conflict of Interest and Ethics Commissioner.
Ultimately, it was not until September 1, 2020, that the member for Etobicoke—Lakeshore provided the last of the missing information, which he had not done until then, despite numerous requests from Commissioner Dion. Mr. Dion did contact the member several times to move the file forward, but without success.
It took the media getting involved and newspapers asking him why his report was incomplete to spur the member to action. As my colleague mentioned, the member used the pandemic as an excuse. However, as many will recall, the House was still sitting on January 7 and February 7, as the pandemic was escalating in other countries. We were not yet facing a health crisis here in Canada.
The hon. member knew his obligations to the Ethics Commissioner because this was not his first election. What is more, the member was a lawyer before entering politics. As lawyers we are required to be diligent and respond quickly when we are asked to do something. That is the minimum that can be done, not to mention simple common courtesy.
The hon. member waited until September 1, 2020. That is no longer a matter of carelessness. It is outright negligence. That is why the commissioner finally recommended a sanction. It is provided for under the code, but this is the first time this has been done in such a context, which illustrates how annoyed the commissioner was by the hon. member's lack of respect and diligence.
In his report, the commissioner reminded members of the importance of obeying the rules, saying that the report should serve as a reminder to all members of the House of the importance of fulfilling their compliance obligations under the code. The compliance rules in the code ensure transparency and accountability to the Canadian public.
No pandemic can be used as a justification for not fulfilling one's obligations to transparency. On the contrary, it should be more important than ever to ensure that hon. members meet these obligations during a pandemic.
That said, this is not the first time that the Ethics Commissioner has made comments about his role. In September 2018, the commissioner mentioned that the intergovernmental affairs minister at the time had violated the ethics rules by granting a fishing permit to a fishing company that stood to make millions of dollars from it. A member of his family was employed by that same company.
It was already an issue at that time and the commissioner wanted more powers, in particular the power to intervene in cases where there was a breach of trust and a breach of ethics.
The comments of the then ethics commissioner are even more relevant today. We need only think of certain ethical breaches that have occurred in recent years. I am thinking in particular of what happened in the Aga Khan file. The Prime Minister and his family had the privilege of a paid vacation, which earned him a reprimand from the Ethics Commissioner.
He received a second reprimand from the Ethics Commissioner for allegations of interference in the SNC-Lavalin case.
More recently, WE Charity paid for a vacation taken by the former finance minister. The whole WE Charity case caused the government to prorogue Parliament this summer in order to deflect attention from the case. Furthermore, some members of Parliament hired family members in their riding offices, which is a breach of ethics.
The Bloc Québécois is therefore suggesting that members further discuss the role of the Ethics Commissioner, as the commissioner himself has requested.
We are suggesting that members look into four ideas based on what the Ethics Commissioner himself wants to be able to enforce.
For example, when the wrongdoing is quantifiable and has a monetary value, it should be reimbursed. This is what we saw with the finance minister. He reimbursed the $41,000 for the trip that had been paid for him, but he was not obligated to do so. If the rule had been enforced on the trip to the Aga Khan's island, the amount of the reimbursement would have exceeded $100,000. That could become an incentive to follow the ethics rules more closely.
Another suggestion could be imposing a more substantial fine on those who violate the code of ethics, since it is currently only around $500. The Ethics Commissioner suggested that it should be more like $10,000, which would serve as more of a deterrent than what we currently have.
In some cases, parliamentary privileges could be suspended outright, thereby ensuring that the higher a person is in the parliamentary hierarchy, the more transparent and accountable they must be. Sanctions could be tougher for those who must exhibit perfect transparency and perfect adherence to the integrity and ethics rules.
Finally, work could be done on the issue of parliamentarians' immediate family members. Perhaps a code of ethics is needed for them, as well. A code of ethics should also be imposed on them, as though they were an extension of the MP's duties. Perhaps that would have been a deterrent in some of the more recent cases that history has brought to light.
In closing, we suggest that the Ethics Commissioner be given increased powers, including the ability to intervene more, as the commissioner himself has suggested. This would avoid the need for us to strike a committee every time there is a breach. It would ensure that the Ethics Commissioner would be given more power so that parliamentarians would no longer feel that they can walk away every time with a simple apology.
View Serge Cormier Profile
Lib. (NB)
View Serge Cormier Profile
2020-12-02 14:56 [p.2814]
Mr. Speaker, this pandemic has been particularly hard on children and young families. When schools, day cares and workplaces closed down, many families had to make very difficult choices. Our government has promised that it will continue to be there for Canadian families.
Can the Prime Minister tell us how the fall economic statement will help families with young children here in Acadie—Bathurst and across the country?
View Justin Trudeau Profile
Lib. (QC)
View Justin Trudeau Profile
2020-12-02 14:57 [p.2814]
Mr. Speaker, I thank the member for Acadie—Bathurst for his excellent question and hard work.
Many middle-class families are having a hard time making ends meet, especially during this pandemic. That is why we have announced additional support, totalling up to $1,200 in 2021, for each child under six for low- and middle-income families entitled to the Canada child benefit.
We have been there for Canadians throughout the pandemic, and we will continue to be.
View Helena Jaczek Profile
Lib. (ON)
View Helena Jaczek Profile
2020-12-02 15:09 [p.2817]
Mr. Speaker, when the first wave of this pandemic hit Canada, child care providers from across the country were particularly hard hit. In many cases, this meant that mothers were forced to leave their jobs and stay home to take care of their children. This is leading to what some are calling a “she-cession”.
Can the Prime Minister tell us how the fall economic statement proposes to address this?
View Justin Trudeau Profile
Lib. (QC)
View Justin Trudeau Profile
2020-12-02 15:09 [p.2817]
Mr. Speaker, I would like to thank the member for Markham—Stouffville for her incredibly hard work.
We recognize the extraordinary and disproportionate toll this pandemic has taken on women. Investing in accessible, high-quality and affordable child care is not only good for families, it makes economic sense.
With the fall economic statement, we have laid the groundwork for a Canada-wide child care system with a new federal secretariat on early learning and child care. By taking this step, we are charting a clear and meaningful path forward to deliver this system for women and families across the country.
View Patrick Weiler Profile
Lib. (BC)
Mr. Speaker, since the beginning of the COVID-19 pandemic, our government has been there to support Canadian workers. More recently, we have transitioned from emergency supports to a more flexible EI system and a suite of recovery benefits for Canadians who are not eligible for EI, are sick, are self-isolating or need to provide care for a child, family member or dependent. Now that we are in the midst of the second wave, some jurisdictions have already announced an extended winter break for students to curb the spread of COVID-19.
Can the minister confirm that parents who cannot work because they must care for a child or family member will be supported through the Canada recovery caregiving benefit?
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