Montréal, December 1, 2011 – As part of pre-budget consultations, Raymond Chabot Grant Thornton wishes to remind Canada’s Minister of Finance, the Honourable James Flaherty, of the importance of taking immediate action to make the tax system equitable for intergenerational business transfers.
“In a context where entrepreneurship in this country is declining and where we must constantly search for ways to encourage the next generation to take over the reins of a business, no business owner must be at a tax disadvantage when selling a business. It’s no wonder, then, that today we are again calling for legislative changes,” said Firm President and CEO, Jean Robillard.
Canadian Firm Grant Thornton LLP is also calling for this change. “We are very pleased that Raymond Chabot Grant Thornton is taking a leadership role on this strategic issue. It is also clear to us that Canadian tax policy should further encourage intergenerational entrepreneurship to thrive in Canada,” added Executive Partner and CEO, Phil Noble.
“An owner who sells his company shares to a third party or to foreign interests rather than to a family member’s company, always has a greater tax advantage because he can claim a capital gains exemption of up to $750,000, which is certainly not negligible, especially considering that proceeds from the sale of an enterprise are often used as a retirement nest egg”, noted tax Partner, Jean Gauthier.
To counteract this tax disadvantage, on December 2, 2010, Raymond Chabot Grant Thornton sent a report to the Finance Ministers of Quebec and Canada entitled, Business Transfers: Problems and Suggested Solutions (www.rcgt.com/business-transfers), which sets out 10 solution options.
Solution options that would be easy to apply
“The advantage of the Raymond Chabot Grant Thornton report is that it not only identifies the sources of the problem, it provides relevant solutions to counteract this tax inequity. The solution options were designed to correct the incongruity between the business world’s reality and the current tax system to encourage intergenerational transfers while addressing an economic need,” said the report’s main author, Suzanne Landry, University Partner at Raymond Chabot Grant Thornton and Tax Professor at HEC Montreal.
Results that are a long time coming
Even after calling for legal adjustments during the recent tabling of the Canadian and Quebec budgets and proposing solution options to representatives of the Quebec and Canada Finance Departments in meetings held this fall, Raymond Chabot Grant Thornton has still not been informed whether this problem was on its way to being resolved. “To make local businesses sustainable by encouraging family successors and thereby contributing to our economic growth, these changes are not an option, they’re a necessity,” concluded Jean Robillard.
About Raymond Chabot Grant Thornton
Founded in 1948, Raymond Chabot Grant Thornton is a leader in the fields of assurance, taxation, consulting and recovery and reorganization services. The Firm owes its success to over 2,000 employees, including more than 225 Partners in over 90 offices in Quebec, Eastern Ontario and New Brunswick. The scope of its network makes it a leader in its business segment. For the past 30 years, Raymond Chabot Grant Thornton has been a member of Grant Thornton International Ltd, providing its clients with the expertise of the member and correspondent firms in more than 100 countries.
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