Madam Speaker, I am pleased to speak in support of Bill C-208, an act to amend the Income Tax Act with regard to the transfer of a small business or family farm or fishing corporation, which was introduced by my colleague, the member for Brandon—Souris.
The amendments made by this bill are necessary to standardize the process for selling family businesses. These amendments would considerably improve the Income Tax Act with respect to the transfer of a small business or family farm to a family member.
In the current state of affairs, the sad reality faced by business owners is that they must pay more taxes if they sell to a family member than if they sell to a third party. The current act puts operators who want to transfer their family business to their son or daughter at an unfair disadvantage. This forces owners to decide whether they want to keep their life's work in the family or sell it to the highest bidder.
If this bill were adopted, it would facilitate many more family business successions. It would also guarantee the retirement savings that business owners worked so hard to earn and enable more local businesses to prosper, which would strengthen the Canadian economy and local economies. We must never lose sight of the fact that SMEs are the cornerstone of our economy.
Everyone in the House knows a factory, a family restaurant, a corner store or a farm in their riding that has been around for generations. These family businesses are well liked and extremely important to the local economy. These small businesses are the backbone of our society. Some of these businesses not only help feed our communities, but they also provide important jobs for the people in our ridings.
The dynamic of keeping a family business in the family is unprecedented. The idea that an owner could be forced to sell their business to a third party simply because of overtaxation is simply shocking. When a third-party purchaser buys a business, many unknowns come into play. Will the new owner cut jobs? Will they move the business to a different region or even a different country? These are the questions the seller must keep in mind, but also their employees and family members.
We know that Beauce is a haven for SMEs. I will provide two real-life examples from my riding.
My first example is Eddy Berthiaume, the owner of Les escaliers de Beauce, located in my hometown of Saint-Elzéar, who was forced to make the difficult decision that I just explained to the House. He owned 50% of this business for many years. He is a good, hard-working man who spent years building his business. When he was ready to retire, he decided to sell his shares in the family business to his children, but unfortunately, he was unfairly forced to pay thousands of dollars in transfer fees. The worst part of this story is that his business partner was able to sell his 50% stake to a third party and pay a pittance in taxes. He paid essentially nothing.
Some may wonder how this is unfair. There are other examples like this one that show how the government is letting down business owners across the country. We need a government that is prepared to grant exemptions to Canadians and that does not penalize tenacious families like the Berthiaumes.
My second example is Estampro, a business in Saint-Évariste-de-Forsyth owned by the Fortin family, who dealt with the same rules for transferring the business to a family member. The business, which was founded in 1984, is already run by the third generation of Fortins. The family had to work extremely hard to get there, however. The time and money they spent on filling out forms for the transfer certainly could have been used to hire extra machinists or to make more progress on automation. Instead, the family was trapped in all of the red tape required by the existing legislation, and we cannot underestimate the impact this has had on the family. I spoke with them this week, and I know that they are seriously wondering what problems they will encounter if the business is transferred to the next generation.
I am sure many of my colleagues are aware of cases like these. There are many others throughout my riding. If the House does not act now, then wonderful, healthy, viable, proudly Canadian companies will end up in the hands of people other than the families that built them or, even worse, in the hands of foreign countries.
This bill will also help Canadian business owners by advancing women's entrepreneurship. Only 16% of businesses and 29% of family farms are majority female-owned. If the government stopped penalizing owners of small businesses and family farms who sell their businesses to their daughters, it would help foster entrepreneurship among women and increase their participation in the Canadian economy.
It is very unfortunate that our party is obliged to introduce bills like this one when we have a government that claims to always be there for women and small businesses. We need the government to get involved and quickly examine the issues raised by bills like this one.
This bill is not partisan in any way. I think that the amendments to this private member's bill are not only a matter of fairness, as many of my colleagues mentioned, but also a matter of common sense.
I cannot believe that this government has not already introduced amendments to the Income Tax Act in this area.
We need to treat business owners fairly. These tax policies are unfair when the time comes for them to step down from their family business. Leaving a family business can be a positive thing if they know they are leaving it in the hands of someone they love and, more importantly, someone who will love and honour the values and culture of the business, as the owner did for many years.
Business owners should not feel like they have to sell their business to a third party simply because it will cost them less. Business owners must also obey the law. We would not want them to make concessions or act fraudulently in order to save the hard-earned pension or retirement savings they would otherwise lose in taxes. That is why it is important that Bill C-208 pass in the House as quickly as possible.
I heard some of my colleagues say that changes to this bill could lead to more fraud and tax evasion. That is why our party wrote protection mechanisms into the bill. To forestall those potential problems, the bill provides that the family member purchasing the business must keep their shares for at least five years to avoid the penalty. This will thwart attempts to exploit the system.
Right now, and especially during this global pandemic, Canadian businesses need our help, not just to stay afloat while we fight the pandemic together, but also in the future when the time comes to sell and buy their family businesses. Canadians want to remain self-sufficient. They want to support their local businesses. Most of all, they want their local businesses to succeed from one generation to the next.
I hope the Conservative Party can count on all parties to vote for this bill, which is so important to our family businesses. I speak from experience, because I myself was part of the fourth generation of a family business.