The March federal budget provided some good news for
Canada’s small businesses, offering measures that will help them save
time and invest for the future. The government increased the capital
gains exemption for small business, gave details of how it plans to
reduce regulations and paper burden, and encouraged new investment by
enhancing capital cost allowances.
The government increased the capital gains exemption from $500,000 to $750,000 for small business, farmers and fishers, effective immediately. With seven out of 10 business owners planning to exit their businesses over the next 10 years, this measure will go a long way in helping provide entrepreneurs with greater retirement security and will help facilitate investment in the next generation of entrepreneurs.
If you’re selling the shares of your shop, this could mean a tax savings of approximately $60,000 (assuming you have a gain of $750,000 and haven’t yet used your exemption).
The government went beyond its commitment to reduce paper burden by 20 per cent, by outlining a plan and setting target dates to achieve this objective. The plan will require key government departments to inventory all their administrative and information requirements, similar to the BC model.
Other tax measures that will be welcomed by Canada’s small businesses include enhancements to various capital cost allowances, so that businesses can more quickly write off their investments in computers and buildings; and an increase in the age limit on contributions to RRSPs from 69 to 71.
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