Bill C-208 (Historical)

An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation)

This enactment amends the Income Tax Act in order to provide that, in the case of qualified small business corporation shares and shares of the capital stock of a family farm or fishing corporation, siblings are deemed not to be dealing at arm’s length and to be related, and that, under certain conditions, the transfer of those shares by a taxpayer to the taxpayer’s child or grandchild who is 18 years of age or older is to be excluded from the anti-avoidance rule of section 84.‍1.

Income Tax Act

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Madam Speaker, I congratulate my colleague. This is amazing. The first time I heard about this problem was in the last Parliament when I was serving on the finance committee. There is a fair bit of farmland in Edmonton Manning, and people there have concerns all the time about this issue.

Why does the hon. member think it is important for the bill to pass? We must secure the continuation of family ownership among small businesses, which is part of our tradition in this country in an industry that is very close to the heart of many Canadians.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, the bill is supported by the Canadian Federation of Agriculture, the Grain Growers of Canada, the Chicken Farmers of Canada, many of the canola growers and wheat growers, many keystone agricultural producers in my province, general farm organizations across the country and fishers. However, I think the big thing here is that all small businesses support it as well, whether that means a shoe store, dress shop, bakery or corner store in a small town or a big city. It is very supportive of making sure that we can transfer small businesses—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Alexandra Mendes]

We have to resume debate.

The hon. Parliamentary Secretary to the President of the Queen’s Privy Council.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the President of the Queen’s Privy Council for Canada and Minister of Intergovernmental Affairs and to the Leader of the Government in the House of Commons]

Madam Speaker, it is a pleasure to speak to my colleague's bill. I can appreciate that he has put in a great deal of effort to get it to this particular point.

There are some very serious concerns in regard to the bill and the impact it will have. I am not 100% convinced that this is the best direction to go. I find it interesting that the member says, for example, that this is all about the family farm and that the family farm needs this particular break. My understanding is that parents can already sell a family business directly to their child, while claiming the lifetime capital gains exemption on the resulting capital gain. I would be interested in hearing my colleague's comments in regard to that aspect.

The issue at hand, in the eyes of many, is not about passing on the family business; rather, it is about corporations. There are all sorts of other issues that come to mind when we talk about corporations.

I am not as familiar with the farming community as the member would be, given his background versus mine. However, what I can say is that I have had the opportunity to visit many farms over the years. Growing up, I can remember being out in Saskatchewan and doing some cultivating on the big John Deere four-wheel tractors on a family farm. There was a belief that the farmers running the farms had them handed down and that they intended to hand them down to their children.

Even though I have some personal, first-hand experience, I do not want to say that I have a complete understanding of all aspects of farming. However, I do support family farms, and I would like to see us enhance them and give them strength.

A lot of family farms are like small businesses, and I think the Government of Canada has very clearly shown its support for small businesses. We have seen that in a variety of ways. A lot of them have been highlighted during the pandemic. We often talk about some of the benefits the government has brought forward, and I suspect that rural communities and even farmers would have been afforded the opportunity to participate in some of the programs. This highlighted the need that is there. It is very real.

Bill C-208 proposes amendments that could easily be misused by corporations, which could look for tax planning opportunities. I do not believe that the member has addressed that issue head on and provided the types of changes necessary to provide assurances.

My New Democratic friends in particular talk a lot about tax avoidance. I would be very interested in hearing them provide their thoughts on that specific issue. Have they looked into that aspect of the legislation? Are we creating opportunities, by passing this legislation, that could provide for tax avoidance?

This is a legitimate question, and it is an area of concern that was not addressed to the degree it could have and should have been addressed at the committee stage. It is a legitimate concern. I would be very interested in hearing what the New Democrats have to say about it.

The former small business minister, who I got to know well because she was the House leader of the government, often talked about the importance of small businesses. I have said in the past that they are the backbone of the economy. We can further add to that to show how important our farmers are. They are the ones putting food on our tables and contributing to Canada's overall GDP and exports. They feed the world. The crops we are able to provide around the world are very impressive. The growth in the Province of Manitoba of the canola industry has been very impressive. It has gone from virtually nowhere years ago to a major crop recognized around the world. We often hear about the importance of prairie wheat and that it is feeding people around the world. We can take a sense of pride in that and look at ways to support it.

In the budget, we heard about a number of initiatives. One that comes to mind right offhand is in the area of drying grains. The budget attempts to deal with that particular issue by supporting farmers.

We could talk about how we supported small businesses through the development of programs during the pandemic, such as the Canada emergency wage subsidy program, which has been very helpful to small businesses in general. We came up with the Canada emergency business account too. Another one I often reference for small businesses in particular is the Canada emergency rent subsidy program. These things are very real and tangible.

We know that many businesses continue to face stress and uncertainty as a direct result of COVID-19. That is why in many ways the government has stepped up to the plate to make sure there is support during these unprecedented times. I referenced the Canada emergency business account, which helped somewhere in the neighbourhood of three-quarters of a million small businesses. We are talking about tens of billions of dollars in loans. The Canada emergency wage subsidy program affected several million people, and, again, tens of billions of dollars were spent on it. There is the additional lockdown support. There was support for the agriculture and agri-food sector. The government recognized it as an essential service and provided support to it. We are committed to supporting producers and businesses so they can continue to provide for Canadians.

We have taken unprecedented action to support farmers, ranchers, food businesses and food processors across the value chain, and have provided support for vulnerable populations. For example, we quickly unlocked the $5 billion in additional Farm Credit Canada lending capacity and launched $100 million for a new agriculture and food business solutions fund to ensure that businesses in the sector have the support they need. We also increased the Canadian Dairy Commission's borrowing capacity by a couple of hundred million dollars. That was to allow us to support costs associated with the temporary storage of things like cheese and butter to avoid food waste.

A number of programs were put into place to support our producers. Programs provided dollars to foreign workers—

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Alexandra Mendes]

We have to leave it at that.

Resuming debate, the hon. member for Berthier—Maskinongé.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I am very pleased to speak to Bill C-208, which would significantly help businesses in Quebec and Canada with succession planning.

I once again want to congratulate my colleague from Brandon—Souris for introducing this bill. The Bloc Québécois considers succession planning to be essential to agriculture and all other sectors. We have supported this sector for a very long time. In fact, we started advocating for this idea back in 2005, after the Union des producteurs agricoles and the Fédération de la relève agricole du Québec issued a joint report that talked about the survival of our fishing businesses and farms.

We are talking about taxation, exemptions and various other topics, but what we are really talking about are small and medium-sized businesses, which are the backbone of our economy. We need to keep these businesses alive and make sure they survive. We need to make sure that these small businesses can keep going and that they are not put at a disadvantage where they will end up being bought out by big corporations. The survival of these small businesses is directly connected to the survival of our regions. This is why I am appealing to all of my colleagues.

I will never get used to it, but unfortunately, I once again sense that there is partisanship at play. It does not matter which party introduced the bill. What matters is that members look at the bill and ask themselves whether it is good for people. If it is good for people, then they should vote in favour of it. We need to correct this serious injustice. By protecting our small businesses, we are protecting our economic vitality. This is about sustainability, saving jobs and keeping knowledge in the community. As I just mentioned, it is about stopping the exodus of young people to urban centres. If they are able to take over the family business, then they will stay in the region.

Before I go on, I would like to give a nod to my colleague from Pierre-Boucher—Les Patriotes—Verchères, who introduced a similar bill in a previous Parliament. I commend him for that.

The Bloc Québécois defends the human-scale business model. I talk a lot about agriculture because I am very biased in favour of the farming community, but this is about all kinds of businesses. Human-scale businesses are the ones that keep regions vibrant and schools filled with children because there are families living in the community. We are not talking about a mega-farm that bought the land from eight of its neighbours, leaving only one family. Instead, there are eight families. That is the model we want to promote. In order to defend that model, we need to pass this bill. That is imperative. We have already been talking about it for too long.

Our SMEs are what keep us alive. It is a sector that has not received enough encouragement. I talk a lot about agriculture, but we want to protect innovative SMEs that could also sell their products abroad.

According to a 2018 estimate, between 30,000 and 60,000 Quebec businesses will not find new owners in the years to come. If they do not find new owners, they will die. If they die, 150,000 jobs and $8 billion to $10 billion in revenue will disappear.

In agriculture, it has long been said that every day, a farm disappears. That has not been the case this past year because there has been a slight increase in the number of businesses, which is great. We are happy about that, but it was no thanks to the government. It was because dynamic people started from scratch and created micro-farms. That is a good thing. We are happy about that, but we still see farms disappearing when they should be staying in business. We could do better. We can do better. Why are we not doing better?

I want us to take that step and move forward. Many of my colleagues have talked about numbers and statistics. I have lots of numbers too, but I am once again not sticking to my notes, which is just fine by me.

I want to talk about real people, real cases like the certified organic, 23,000-tap maple syrup operation owned by parents who are paying accountants a fortune to figure out how they can set up the transfer. Does another business have to buy the business? This is the parents' pension fund, and they want to pass it on to their children. They have to make a cruel choice. It makes no sense. That is the kind of example people keep sharing with me to this very day.

The dairy farm in Lac-Saint-Jean is another example. They keep postponing transferring the farm because they cannot come up with a solution, because there is no solution.

I would like to correct something my Liberal colleague said a moment ago. It is not true that the capital gains exemption can be used, otherwise we would not be voting on Bill C-208. I really hope my colleague will have a closer look at this file because in the cases brought to my attention, people are racking their brains for days, weeks and months, even paying a fortune to accountants.

On the other hand, the Liberal government likes to make people fill out complicated paperwork, to the point where they are forced to hire others to fill it out; that is how complicated it is. This seems to make the Liberals happy.

The Bloc Québécois does not think like that. We want to simplify people's lives and support the next generation, our youth and the people who want to live in our regions.

I want to share another example, and this is a true story.

A young person was nearing the end of negotiations to take over the family farm when he left on a trip. While he was away, his parents received an offer from someone outside the family that they could not refuse. The person offered ten times as much. The parents ended up selling the farm to the stranger. That type of situation destroys families and leaves permanent scars.

There are other examples of parents who hand over their business to their children out of a sense of obligation because they would lose sleep if they did not allow their son to take over the farm. As a result, they end up bitter and living in poverty. This also leaves scars. There are inn owners who resign themselves to paying a fortune in taxes. The father resigns himself to living on half of what he anticipated for his retirement. If that is not disgusting then what is?

Come on. We are the government. We have no right not to change this. Bill C-208 is very simple. It amends the Income Tax Act to give people who hand over their business to a relative the same privileges as someone who sells their business to a stranger. That is the right thing to do. Where is the problem? Where is the tax evasion?

Seriously, I sometimes find it difficult to remain calm when I hear the Liberals tell us that this could lead to tax evasion. We have been talking to them forever about tax havens and nothing has happened. Are they kidding me? Are they talking about tax evasion and SMEs? It does not happen often, but I am pretty much speechless. I could not even speak earlier. I told myself that it was not true, that my colleague did not say that, but he just did. We are talking about millions of dollars in tax havens. What about the web giants? How long have the Liberals been waffling to avoid taxing them? The idea is to ensure the survival of other smaller companies, such as our regional media, but they prefer it big and complicated. They favour their friends.

I am tired of a system that goes after and punishes the little guy. Small businesses are forced to fill out 28 forms, which stifles any economic momentum. Let us talk about the money. The Liberals have said that this will cost more than $1 billion, but that is not true. If I recall correctly, in 2017, the cost was estimated at $256 million. This really gets to me.

People thinking in terms of microeconomics see this issue only as a business that ceases to exist. Say the farm is sold to someone outside the family and is merged with a larger company. There is much more at stake here because the suppliers, the employees and the creditors are losing a business partner.

Family transfers are good because they allow for stability and familiarity. People know the business they have been dealing with for 25 or 35 years. When the son takes over the business, it is still the same business. He will keep it going.

Quebec changed its tax laws in 2016, yet another example of how Quebec is ahead. This week, the example was day care. This is good news, as long as we get the money.

I would like the House to come to that realization in this case too. Once again, the federal government is trying to catch up with Quebec laws. I am not saying that in a derogatory way. It is the truth.

Independent studies have shown that 47% of SME owners intend to exit their business within the next five years and 72% of them plan to exit within the next decade. In the fishing industry, a very high percentage of business owners are over the age of 50. Some might say that 50 is the prime of life. It is for me. However, that also means that the next generation needs to take over.

I am making a heartfelt plea and I want to send another message. To the government members who use doublespeak and make promises in private or during meetings by saying that this cause is important and that they are going to work on it, I want to say that now is the time to prove it. This is a good bill, and I am asking members to pass it.

Young people in Quebec and Canada are watching us. Business owners, those who support us and pay taxes are watching the government and waiting for results.

This is the first time that this bill has made it this far. Let us pass it.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, I am pleased to rise to speak to Bill C-208 on the transfer of small businesses, family farms and fishing corporations between family members.

It is no secret to members in the House that the New Democrats definitely believe that the ultra-rich and wealthy ought to be paying their fair share, and we have done a very good job of making a case for that in this Parliament. We have proposed some concrete measures for how that might be done.

We have also been champions for small businesses in Canada. We know they are the backbone of the Canadian economy, with 80% of the jobs in our economy created by small business owners. We appreciate farmers and fishers and what they contribute to the Canadian economy and to the world, with all the food they export outside of Canada the world over.

These are important industries. The businesses within them, whether it is a farm or business, are developed by families and become part of the family. Those families are known in their communities. As the former member said, they have relations with suppliers and others within their communities. Being able to pass that family business on to their children is important. It is important for the family from an identity point of view and from the family's economic point of view. However, it can also be important to communities as well, that sense of stability and to ensure that the people who are employed at those businesses and people who do business with those businesses continue to enjoy those relationships and the economic benefits of them. This is why I am quite pleased to stand in support of the bill before us.

Earlier, the member for Winnipeg North talked about the NDP's concern for tax evasion, and he is absolutely right. We can talk about tax havens. New Democratic members have had private members' bills before the House, members who are serious about taking action on the biggest tax evaders. However, some of the small businesses in our communities, and I think of a small business I know, a sign company that a husband and wife developed over 30 or 40 years, want to pass the business to their children. They are not the people who are shunting money out to the Barbados, Cayman Islands and other such places.

The fact is that if business owners choose to sell to their children, under the current tax rules, they will pay considerably more than if they sell to a complete stranger, so there is a principle of fairness here. It just does not make sense that by selling a business that is the life's work of a family within the family that it would be penalized and have to pay more. That is what we are trying to address here.

I think the member for Winnipeg North misunderstands the bill, frankly, when he mentions the capital gains exemption. Of course, the very point of the bill is that if people are selling to immediate family members, they do not benefit from the capital gains exemption. That sale is not taxed as a capital gain; it is taxed as a dividend. The whole point of the legislation is to allow those family members to benefit from the very capital gain lifetime exemption to which the member for Winnipeg North was speaking.

I think some members do not necessarily expect that when the member for Winnipeg North gets up to speak, that he will have a very detailed knowledge of what he is speaking about, but that is no excuse for his government, or the ministry or other members of his party for that matter. They should hold themselves to a higher standard and really come to have an appreciation of what is in the legislation.

Why, when the New Democrats are so concerned about tax evasion, do we support the bill? There are a couple of things.

One of measures in the bill is that to get this different tax treatment under capital gains as opposed to dividends, the family member who receives or purchases the business has to continue to be the owner of that business for five years as opposed to the current two years. That is my understanding. It is meant to promote the idea that if the sale is happening, it is happening because someone within the family genuinely wants to take over the business, not just flip it for sale. Therefore, if within those five years, the business is sold again, then it is retroactively treated as a dividend sale and taxed appropriately, taxed as it is under the current legislation. At that point, it is not about successorship within a family, it has become something else.

One of the things that gives me comfort is that the bill is not the product of one political party that might have a particular agenda. A former NDP member of Parliament, Guy Caron, developed this private member's bill. He put a lot of work into it. As the NDP finance critic, he was someone who did excellent work on tax evasion and was very concerned about it. It was one of the things that motivated him to get into politics. He did that not just as an amateur within politics who was assigned the finance portfolio, but he did it as somebody who worked as an economist his whole life prior to getting into politics.

He understood very well not just the issue of tax evasion but also the particular dynamics of the bill. He sought to craft a bill that really would honour the idea of being able to pass a business down within generations of a family and to do that in the right way, so it did not just become a loophole or an excuse to evade taxes, something the New Democrats fiercely oppose.

Those are some of the elements, both concretely within the bill with respect to what the legislation would do but also where the legislation comes from, that give me confidence that this is not about introducing another means for tax evasion into the tax code. It really is about settling a fundamental unfairness, where people who spend their lives pouring their heart and soul into a business and make it a success, whose children have oftentimes been part of that success, and then want to ensure it gets passed on within the family and can do so without paying a large financial penalty. This also helps to ensure that these assets for our communities stay in local hands.

Sometimes the only people with the capital to buy a business are foreign investors, which sometimes happens, whether it is with small businesses or with farms. Either large corporations or foreign investors purchase these things. It makes more sense for the family, if the differential is $400,000 or $500,000 as we have heard in some cases, to come to the decision that it is in fact better off not doing what its heart wants to do, which is to keep that business or that farm within the family, but to make a more hard-nosed financial decision about the family's best interests. This would allow families to take off the table the factor that makes it far more profitable for them to sell to a stranger than to keep it within the family.

Those are some of the issues at play. As I said, this is something that New Democrats believe in, but it is also part of a package of advocacy that New Democrats have brought forward for a long time, and particularly within this Parliament. I have been really impressed with our small business critic, the member of Parliament for Courtenay—Alberni, a former small business owner himself, He was right out of the gate when the pandemic began, advocating for a 75% wage subsidy when the government said it would only be 10%. He knew how important it was to get beyond just covering payroll costs and providing wage replacement. He was the loudest voice out of the gate for the need for a commercial rent subsidy. He has been advocating for an extension of the Canada emergency business account loan program. We saw a small extension in the most recent budget. We are glad to see that, but there is more work to do.

The New Democrats believe in small business. We are advocating for small business. We see this as part of a package that is important for small business and farmers, so they can keep all the hard work of their families with in their families when the time comes to pass that business on.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Madam Speaker, if there is one group of Canadians that has been hard hit during the pandemic, it is small business owners, men and women who risked everything to build a dream, maybe a small boutique grocery store on main street, a specialty bakery featuring grandma's secret apple pie recipe, the butcher who was taught by his father how to make sausage like they did in the old country or a unique restaurant featuring a mix of Italian pasta and Lebanese kebabs. They all have one thing in common: They have all been holding on by a thread, trying to keep the business afloat long enough to make it to the other side of these restrictions.

Moms and dads work tirelessly besides sons and daughters, aunts and uncles, grandmothers and grandfathers, all leaning on each other to keep that dream alive. Even before COVID, these hard-working entrepreneurs laid it all on the line, hustling endless hours, with no sick leave, vacation pay, maternity benefits or RRSPs. They put every penny they made back into the business, investing in the future, building a legacy, something that made their community a better, more dynamic place to live.

A huge majority of these brave job creators and risk-takers work side by side with their families, guiding son or daughter in the art of providing services within their community. These are fathers showing sons how to grind the pork, beef and spices just so to create the perfect kielbasa coil; or a mother demonstrating the art of making fluffy pastry crusts for the next day's batch of fresh fruit apple pies, recipes and skills handed down by word of mouth, with a keen determination to pass on skills to the next generation, quietly passing on knowledge that would otherwise be lost. Shoulder to shoulder, the generations tend to customers and suppliers, making deals and creating jobs in their local neighbourhoods.

It is in this organic-style school of business that big government just cannot help but cause havoc by way of unfair taxes, taxes that disadvantage a father when selling the family farm to his son or a mother selling the French bakery to her daughter. After years of giving everything they had to build their dream, late nights washing dishes, early mornings mucking stalls, long hot summers sitting in the combine or cold hard winters packing tomatoes into crates, they finally are ready to lay down their tools and pass the business on to the next generation.

What do these owners find when they go to sell their firm? That the government considers them a tax cheat simply for wanting to sell to their children rather than a third party stranger. It has to be said that passing a business on from one generation to the next is no easy feat at the best of times. Many family businesses have had a hard time surviving the challenge, so the very last thing the government should be doing is making this more difficult by disadvantaging the transaction.

There are 1.1 million small businesses and farms across Canada looking, hopefully, to the passage of this bill, which would ensure they have a level playing field when it comes to transition of ownership between parents and children. In our own family, I know the many years of hard work that went into the planning for transition, and yes, we incorporated early on. That did not make us terrible, awful people.

First, owners need to ensure their bankers are confident that their children will be able to succeed going forward. They need to earn the trust of their customers and suppliers that the generation will be able to skilfully man the helm when they one step away. They need to negotiate the rough waters of family dynamics that play a huge role in family business succession. Quite honestly, passing a business on to our kids is far more difficult than just selling to a third party.

Selling to a stranger does not disrupt the harmony of family Christmas dinners. It will not damage people's ability to see their grandkids when bitterness creeps in between their kids. It will not cause rifts between fathers or brothers like a family business succession can do, yet government treats those who are willing to walk that hard road like uber-wealthy tax evaders who are only in it for the quick buck. Nothing can be further from the truth.

Family business succession is not for the faint of heart and takes years to accomplish, so why do we keep punishing families for wanting to pass on a legacy? Not only that, but the current system is totally disrespectful to the hard-working Canadians whose entire retirement savings are wrapped up in their small business. Currently, these savings are seriously impacted if they choose to try to keep the business in the family.

This bill appears to be very timely from the perspective of a COVID recovery plan, since we know our small businesses will be paramount in helping us get our economy back on track when we finally reopen.

We all know that family businesses are the lifeblood of our economy and our communities. Honestly, I cannot wrap my mind around why the government would punish parents and children for being willing to put their blood, sweat and tears into a small enterprise only to be considered tax cheats for the simple desire to pass it on to the next generation.

Consider the story of a couple who owns a business in a small town, wants to retire and relies on the sale as their retirement fund. This sort of thing happens all the time. Now imagine the couple was hoping to retire and sell the business to one of their daughters who has been working with them for years. She is excited to take over from her parents and continue building on their legacy.

In the meantime, they are approached by a much larger, non-related company that has no local ties. This larger corporation would want to produce the goods in the bigger urban centre where it is based, possibly even overseas. Ultimately, this would mean completely shifting jobs and economic activity out of the local community.

As happens often, when they did the math with their accountant, they discovered it would cost up to 67% more in taxes for their daughter to buy their business than for a stranger, simply because she was their daughter. It makes no sense that we do not have a level playing field here, especially considering how much communities gain from family farms and businesses run by successive generations. It is clear that a robust COVID-19 recovery will need healthy small businesses that are owned and operated by passionate local entrepreneurs, and that this bill would make a huge difference for local family-run businesses that want to keep their work in the family.

Because this bill is critical for small, family-owned businesses, how many people have actually opposed the bill? As we can imagine, it has overwhelming support across the country including from the Chicken Farmers of Canada, Grain Growers of Canada, Canadian Taxpayers Federation, the Canadian Federation of Independent Business and chambers of commerce, just to name a few, not to mention every Canadian small business owner who seeks to keep their business in the family.

For too long this situation has continued unabated, but why is that? Looking at similar bills that have come before Parliament in recent years, it seems that a significant reason they have never made it through Parliament is the advice that tax analysts give to the government of the day. The complexity of the Tax Act, which creates these disadvantages for family-owned businesses, was meant as an anti-avoidance measure.

I understand the need to safeguard against tax avoidance. That is why there are safeguarding measures built into the bill. However, the way the laws are currently set up, all business owners who seek to keep their businesses in the family are being punished because of the few who might try to game the system and avoid paying taxes. In typical fashion, we are punishing the wrong people. There will always be a chance that someone is trying to cheat, but contrary to the Prime Minister 's belief, most small business owners are not tax cheats. Most small businesses are not simply shell companies created for wealthy Canadians to avoid taxes. Only the wealthy elite who have never had to sweep the floor in their father's grocery store or sling bales on their uncle's farm would believe something like that.

Over 50% of Canadian small business owners wish to pass their businesses on to family members. Nobody in their right mind thinks that 50% of small business owners are looking to cheat on their taxes. I think we all agree that they deserve a level playing field. They do not deserve to be forced to choose between being hammered with extra taxes, which put their retirement in jeopardy, and selling their farms outside of the family and outside of the community.

Whoever is suggesting that we oppose this bill needs to remember that it is our job to serve the public, not the other way around. It is important for the government to remember it is time to show some political leadership and say, “Look, Canadians are being treated unfairly and we are going to fix it.”

If the government will refuse to show leadership on this, thankfully I am confident that Parliament will. We are, after all, the voice of the people. We need the bill to pass to ensure that our most valuable asset, the job creators and risk takers who make our communities strong and resilient even in the face of a devastating pandemic, are able to thrive. I call on all my colleagues to support this bill and bring fairness back for the little guy.

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Alexandra Mendes]

The hon. member for Malpeque has about 30 seconds for a short intervention.

[Wayne Easter, Liberal, Malpeque, PE]

Madam Speaker, the finance committee held a very intensive hearing into this. We passed it back to Parliament. We looked at the tax implications.

The bottom line is what this bill means for the community. The backbone of the community is small businesses, farmers and fishermen, and especially those who can pass a business down from generation to generation. This is an issue of tax fairness and should be supported fully.

If officials have a problem with this, then they should put their corrections forward in a ways and means bill in the future, but they should pass this necessary bill now and support farmers, fishermen and small business.

[The Assistant Deputy Speaker (Mrs. Alexandra Mendès), Alexandra Mendes]

The time provided for the consideration of Private Members' Business has now expired and the order is dropped to the bottom of the order of precedence on the Order Paper.

The House resumed from April 21 consideration of the motion that Bill C-208, An Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), be read the third time and passed.

[The Assistant Deputy Speaker, Carol Hughes]

Resuming debate, the hon. member for Malpeque had nine minutes left when the debate resumed last time.

The hon. member for Malpeque.

[Wayne Easter, Liberal, Malpeque, PE]

Madam Speaker, I am very pleased to get the opportunity to speak a little further on Bill C-208, an act to amend the Income Tax Act regarding transfer of a small business, a family farm or a fishing corporation, which is sponsored by the member for Brandon—Souris.

As members know, Bill C-208 is now at third reading stage. How did it get here? Simply put, Bill C-208 has had considerable debate in the House and was referred to the finance committee, which I chair. I will make a few comments on what witnesses had to say before committee in a moment. The finance committee referred the bill back to the House without amendment.

Bill C-208 has a long history, and it criss-crosses the political landscape. It was first introduced by the current member of Parliament for Bourassa, a Liberal, two parliaments ago. In the last Parliament, the same bill was brought forward by Guy Caron, an NDP member. Now, in this current Parliament, it is sponsored by the member for Brandon—Souris, a Conservative member.

This long history, across all major political parties in the House, certainly shows that there is a need to bring fairness and equity from a taxation perspective to the transfer of family farm corporations, fisheries enterprises and small family businesses. Quite honestly, it is long past time that this problem was fixed.

During an earlier discussion at third reading, it was suggested by the government spokesman that just maybe the bill could provide opportunities for tax avoidance. I would agree that tax avoidance is a legitimate concern. However, I must point out that at the finance committee we heard from 17 witnesses, and every opportunity was given to address the concern of tax avoidance. We called on the public and Finance Canada to provide witnesses and propose amendments, to anybody who had those kinds of concerns.

I certainly appreciate that the assistant deputy minister of the tax policy branch and the senior director of the tax legislation division in the tax policy branch appeared and answered questions, and their comments appear in the transcript for the finance committee for anybody who wants to see it. To be fair, they did outline some concerns, especially as it relates to what is called “surplus stripping” for the purpose of tax avoidance.

Where does that leave us? On the one hand, we have concerns being expressed by officials, and I do take their concerns seriously. On the other hand, we have a broad section of witnesses who expressed a serious and immediate need for a way to transfer a small business, farming corporation or fishing enterprise without facing unfair taxation when transferring to a family member. We do not see amendments to the bill that would fix this alleged problem.

I would even agree with those who might say that private members' bills are not the best vehicle to change tax policy. They are not. However, we simply cannot allow this inequity disadvantaging intergenerational transfers to family members to continue. It is time to accept the only change that is on the table to fix the problem, and that happens to be Bill C-208.

The sponsor of the bill, the member for Brandon—Souris, gave about the most concise and clear example of this inequity in the tax system. He said:

The second example was a father wanting to sell his farm to his son to fund his retirement. If the father were to sell his farm to a stranger, he could use his capital gains exemption on the sale, resulting in an effective tax rate of 13.39%. However, if the farmer sold his farm to his son, that sale would be recorded as a dividend rather than a capital gain, and the farmer would pay 47.4% in tax. That is a huge difference, and I think we can all agree that it is completely unfair.

The second quote is from Ms. Robyn Young, president-elect of the Insurance Brokers Association of Canada.

She said this:

In closing, this is an issue of equity and fairness. Business owners should not be penalized for selling their business to a family member. Tax implications should never be a consideration when making the decision to sell a business to a family member.

There were many other good witnesses I could quote and make the point on this serious inequity, including the UPA, the Canadian Federation of Agriculture, other farming and fishing organizations, the tax manager at Deloitte, underwriting companies and more, but I think members get my point.

The backbone of many communities are small businesses, farmers and fishermen. Those who can pass a business down from generation to generation create the history and the character of many of our communities in the country. We need to give every opportunity for those families to make that transfer.

It is absolutely true that during this pandemic the federal government has been there in every way possible to support Canadians, businesses, farmers and fishermen. Tax policy, however, should not cause a disincentive to transfer to the next generation. Tax fairness should be the cornerstone on which to encourage intergenerational transfers. This bill would move tax policy in that direction.

Finance Canada, and the government for that matter, always have the option to put forward corrections in a ways and means motion if concerns expressed before committee do arise in reality. That, in itself, is a safeguard. They have the ability to do that fairly quickly through a ways and means motion. However, farmers, fishermen and small business owners, with respect to the unfairness of this taxation system, have been waiting for this change for years.

We have to put the shoe on the other foot. Instead of having those families that want intergenerational transfers sitting in the wings waiting for something to happen, we have to pass this bill and put the shoe on the other foot. If there is a problem, then government has the ability to fix that problem. I am encouraging others to recognize this problem.

I, for sure, will be supporting Bill C-208, and I hope others can do the same.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Madam Speaker, I want to congratulate my colleague on his speech, which was interesting. My speech will be along the same lines as his, as it was all very sensible.

In his speech, my colleague said that Bill C-208, an act to amend the Income Tax Act, is not partisan. The bill does not belong to the Liberal Party, the Conservative Party, the NDP or the Bloc Québécois.

In fact, since there were no questions and comments following the remarks by the previous speaker, I would like to point out an oversight. I believe it was an oversight. Perhaps not, but I hope it was.

He mentioned some of the previous versions of this bill intended to facilitate the transfer of family businesses. Yes, the hon. member for Bourassa did in fact introduce legislation to facilitate the transfer of family businesses when he was in opposition a few years ago. Yes, it is also true that the former member for Rimouski-Neigette—Témiscouata—Les Basques, Guy Caron, had also introduced legislation to facilitate the transfer of family businesses.

However, my colleague may have forgotten that the member speaking right now, in other words me, also had the opportunity to introduce Bill C-275, which sought to facilitate the transfer of family businesses. I introduced it at roughly the same time as my former colleague from Rimouski-Neigette—Témiscouata—Les Basques. In fact, as we were announcing the introduction of this bill, my former colleague from Rimouski-Neigette—Témiscouata—Les Basques thought it was such a good idea that he quickly introduced his bill as well.

There was a bit of a friendly competition about doing the right thing. We wanted parents who want to hand down their business to their children to stop being penalized. This only makes sense, because it is good to see a family's achievement carry on.

Now it is the Conservatives' turn to introduce a similar bill. At the time, when they were in government, the Conservatives were against it, but now they support the cause. Of course we are very pleased to see that, but we are still disappointed to see that the current Liberal government does not seem to want to support the bill. It is hard to understand. How is it that when the Liberal and Conservative parties are in the opposition they want to do the right thing, but when they are in power they do not? That is quite disappointing, to say the least.

When this type of bill is introduced, many people pay attention to the ongoing debates. When the bill was introduced, and then when we began debating it, I immediately alerted certain businesses in my riding as well as some people I went to school with who also wanted to take over their family businesses. After seeing so many bills fail, they were all excited and hoped that this one would come to fruition.

In the meantime, after so many bills failed to pass in previous parliaments, the Quebec government decided to act. Quebec changed its tax legislation to allow the transfer of family businesses. It would seem that the federal government is frozen and incapable of moving forward. When either the Liberals or the Conservatives come to power, everything suddenly stops and fails to move forward.

I am making a heartfelt plea, which I believe echoes the pleas of the people who have been contacting me. They want to know what progress has been made on this bill and whether it will pass. Sometimes I tell them that even if my bill does not pass, some measures might well be included in a budget. In several economic updates and even in some budgets, the government stated that it would work to facilitate the transfer of family businesses and that it would examine the legislation to make certain improvements.

Once again, the government is giving people hope. People are thinking that maybe the government is finally going to do something. It is disappointing, because year after year there is always a holdup. Is it an administrative problem or does the bill run counter to some kind of interest? I do not know who would have an interest in preventing families from passing their business from one family member to another.

Passing a business on to the next generation is not easy. It is rare. People often say that it is difficult to transfer a business and to encourage their children to take over the family business. When their children do want to take over, why are we stopping them from doing so? Why would we financially penalize those who pass their business on to family members but not penalize those who do not? Why is it more profitable to sell one's business to anyone other than one's own children?

For example, I could sell my business to a stranger and make more money. There are many parents who have to think about that option. Obviously, all parents want what is best for their children, but when they see that passing their business on to their children could, in some cases, cost them hundreds of thousands of dollars, many of them have to stop and think about whether doing so is financially viable for them. Not all business owners have millions of dollars put away. Often these business owners invested in their business thinking that they would use it for their retirement. They therefore want to be able to benefit from it.

This is creating quite the dilemma for people. If they pass their business on to their children, then they may have to forgo their retirement. It is really disappointing to see that this situation has not yet been resolved. That is why I wanted to speak today, to bring to light this issue, this problem.

We also have to look further ahead. What happens when there is no one in a family to take over the business? The owner has to seek out someone else, approaching businesses or people who are already well established, such as a competitor, a bigger company. That is what poses a problem.

Family farms can disappear when they are taken over by larger farms. I have nothing against large farms, by why not let small businesses exist and prosper, run by people who are working for themselves and being their own boss? I think that would be nice. However, we are faced with a bill that hinders that possibility.

If we let farms disappear, if we let small businesses disappear because there is nobody to take them over, we are making other people think it is not easy to start a business or start a farm. Ultimately, if we want to allow those transfers, if we want to avoid seeing mega-businesses and mega-farms that are held by shareholders and operated by absentee executives and managers who live who knows where or are very far away from the customer, the consumer, we have to be flexible and attentive to this concern.

I studied accounting. Business owners and I are not the only ones saying we are frustrated. We are also hearing that from accountants, accounting students and professors, who have been saying for ages that the government is not interested in listening or understanding. We were hearing it back in the early 2000s, when I was in university. Professors did not understand why the government was not doing something about this issue. All the students were appalled to learn that, by law, this kind of capital gain was considered a dividend, which meant at least twice as much tax had to be paid on that gain. Financially, that hurts. Like it or not, money influences these decisions and affects the young people who would like to take over.

As I see that my time is almost up and I do not want you to interrupt, Madam Speaker, I will conclude with a heartfelt plea. I implore the government to finally listen to the wishes of the business world, small businesses, members of the House and members of the Standing Committee on Finance and to do the right thing by supporting and passing this much-needed bill.