As noted in the presentation, 40% of small family businesses will be transferred in the next few years, based on the average age of the owners. These businesses represent $50 billion in assets.
Usually, when a farm business is transferred to the next generation, the tax savings realized by the transferors are shared between the transferors and the acquirers. This gives the family business an advantage by allowing it to reinvest in equipment and labour, for example. So better tax fairness would make these kinds of transactions easier and give the buyers a better foundation to grow the business and the sellers a better opportunity to retire. That's really important.
It is difficult to predict how many businesses, in absolute terms, will not be transferred. It is the role of parliamentarians to facilitate intergenerational transfers through Canadian tax laws. We also want to develop a generation of entrepreneurs in Canada. The Canadian economy functions thanks to small and medium-sized businesses. They create the most jobs in Canada, especially in rural areas. So we need to encourage those types of businesses.
At the same time, the value of agricultural assets is getting higher and higher. Think of the value of land and equipment, among other things. To facilitate the operation of farm businesses, tax law favours incorporation because it allows for better business planning and management. However, when it comes to business transfers, the law penalizes those that are incorporated.
So there is currently a form of incongruity between the tools that the law provides and the supports that are available afterwards, when it comes to transferring businesses. Most small and medium-sized businesses, often built by family, are transferred to other family members first, when possible. To me, that's really important.
It's the role of parliamentarians to correct the situation.