As real estate professionals, we know a lot about our clients and we're always looking to help them. Sometimes helping is not just about real estate.
If your client has a family-owned business, sooner or later the founders will look to exit and enjoy the fruits of their labour. Often the best exit or most attractive exit is selling the business to a family member.
New federal legislation now allows a family-owned business to be sold to a corporation controlled by a family member in a very tax-efficient way. But what does 'efficient' mean?
As an example, say mom and dad would are selling their family business for $1 million. Under this new legislation, they can use their capital gains exemption to pay no tax on the $1 million. Their son can use corporate funds to pay $1 million.
The CRA does not like this new legislation, and we expect it's likely going to disappear later in the year when the next government budget is released. Using our example, if the legislation disappears, mom and dad would have to pay $250,000 in tax instead of no tax and their son would end up paying $1.5 million instead of $1 million.
This is huge!
So, if any of your clients are selling their family business, be a hero! Tell them about this very limited time opportunity and help them save a bundle on tax.
Cheers,
Barry
