Parliament Votes To Facilitate Intergenerational Business Transfers

A majority of the House of Commons recently voted on third reading in favour of private member's Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), which aims to amend section 84.1 of the Income Tax Act (Act). On June 22, 2021, Bill C-208 passed (on division) without amendments by the Senate, and on June 29 it received royal assent. Currently and in very general terms, when an individual sells shares of a corporation to a corporation controlled by a family member, section 84.1 of the Act may result in the proceeds from the sale being treated as a dividend, whereas such proceeds would receive more favourable capital gains treatment had the taxpayer sold these shares to an arm's-length party. Bill C-208, will limit the application of section 84.1 of the Act in cases of intergenerational transfers of a business. Since the bill has no coming-into-force provisions, it could conceivably come into force on the