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As entrepreneurs get closer to retirement, many of them would like to hand over the reins of their family business to their children. However, transferring the company to your children could be more complicated than selling it to strangers.
In an interview in L’Étoile du Lac, Éric Dufour, Partner and Vice-President, Management Consulting, tells us why:
“At the provincial level, the situation has been rectified, but this is not the case at the federal level. There is no tax exemption of up to $900,000 that applies when selling to family members. This complicates the transaction. You have to be prepared to make monetary sacrifices, because a company’s value, that’s the owner’s pension fund. It’s an obstacle and it’s time for the government to change this outdated 1980s tax system.”
Dufour also pointed out that the key to a business transfer lies in planning: “You have to undertake a plan that spans four years. An inter-generational overlap occurs, which means there is an adaptation period. This makes it all the more important to be supported in the process.”
The issue of intergenerational business transfers is still a concern for our Firm. In Quebec, a number of constraints still exist while at the federal level, the entire issue persists. We invite you to view the Firm’s recommendations, including recommendation 7 in the prebudget recommendations presented to the Quebec government at the time of the last Quebec budget.
Contact one of our entrepreneurial succession experts for support during the important process.