Mr. Speaker, today let me once again reassure members opposite, including the hon. member for Joliette, that our government is always standing up for the interests of Canadian farmers and fishers, and others who own and operate businesses in Canada.
Our government has worked hard to foster an environment in which businesses can grow and contribute to Canada's long-term prosperity. To help small businesses grow and create jobs, this government has delivered substantial, ongoing tax relief to small businesses and their owners. Let me remind the member of a few.
On September 11, 2014, the government announced further action to create jobs, growth and long-term prosperity with the introduction of the small business job credit. This credit is expected to save small businesses more than $550 million over 2015 and 2016.
This measure builds on substantial support for small businesses, including reducing the small business tax rate to 11% as of 2008, and increasing the amount of annual income eligible for this lower rate from $300,000 to $400,000 in 2007, and to $500,000 in 2009.
We are reducing the general corporate income tax rate to 15% in 2012 from 22.12% in 2007. This benefits successful small businesses on their way to becoming big businesses when their income exceeds $500,000.
We are increasing the lifetime capital gains exemption on qualified small business shares to $750,000 from $500,000 in 2007. The government further increased the exemption to $800,000 for 2014, and indexed the limit to inflation, bringing it to $813,600 for 2015. The exemption is estimated to be delivering over $1 billion of federal tax relief annually to small business owners and owners of farm and fishing businesses.
However, more recently, economic action plan 2015 goes even further, introducing a new reduction in the small business tax rate. It also proposes to further increases the lifetime capital gains exemption to $1 million for qualified farm and fishing property disposed of on or after April 21, 2015.
With respect to the small business business tax rate, which was reduced to 11% in 2008, it generally applies to the first $500,000 per year of qualifying active business income. This preferential rate allows small businesses to retain more earning than can be used to reinvest and create jobs.
Almost 700,000 small businesses benefit annually from this lower rate, including farmers and fishers.
To further encourage small business growth, economic action plan 2015 proposes to further reduce the small business tax rate to 9% by 2019. It is estimated that this measure will reduce taxes for small businesses and their owners by $2.7 billion over the 2015-16 to 2019-20 period.
Take the example of a small business with $500,000 of taxable income. As a result of actions already taken by the government to reduce the small business tax rate and increase the amount of income eligible for that rate, the amount of federal corporate income tax paid by this small business would be 34% lower in 2015 than in 2006. When the proposed reduction in the small business tax rate takes full effect in 2019, the amount of federal corporate income tax paid by that small business would be 46% lower than in 2006.
In other words, for this business, our government's measures provide an annual tax reduction of up to $38,600 that can be reinvested in the business to fuel its growth.
Small businesses, many of them in rural Canada, are saving thousands of dollars in annual business taxes. That is money that can be reinvested in their business to help it grow and prosper. We recognize the important contribution rural communities make to our economy, and we are committed to helping them achieve their goals.
We are proud of our commitment to supporting Canada's farmers, who are the backbone of our country, which is why we have consistently recognized the value of farmers when it comes to job creation and opportunity. A strong rural Canada makes for a stronger economy overall.
Now let me turn the attention of the House to Bill C-661, a bill that proposes a relieving income tax amendment to expand the scope of an exception to an existing anti-avoidance rule. Currently an existing income tax rule generally prevents corporate shareholders from avoiding tax on the sale of their shares by receiving tax deductible intercorporate dividends that reduce an accrued capital gain before the share sale.
Bill C-661 proposes a relieving income tax amendment to expand the scope of an exception to that existing anti-avoidance rule. This exception is currently available for spouses and their children as they are presumed to have shared economic interests. In the farming and fishing context, tax deferred transfers of assets are generally permitted between spouses and parents can leave farming or fishing property to their children without triggering capital gains tax.
In contrast, siblings who are shareholders in the same business are considered to have separate economic interests. Therefore, they are not eligible for this exception for closely related persons. This is consistent with many tax rules which generally do not accommodate tax deferred transfers of assets between siblings.
Instead, like other taxpayers in business together, the existing rules already allow them to divide their corporate interests on a tax deferred basis as long as each of them receives their pro rata share of each type of property in the business being split up. This exception allows siblings to divide a farming or fishing business into two separate farming or fishing businesses that they can carry on separately.
Bill C-661 would allow siblings to benefit from the first exception as if they had shared economic interests. In effect, this would enable siblings to exit the farming or fishing business, while deferring capital gains tax. This would be a special tax concession not available to other shareholders in similar circumstances and inconsistent with the general scheme of the tax rules, which generally limit tax deferred asset transfers to spouses and, in some cases, children.
What makes this private member's bill all the stranger is that the same member is extremely opposed to income splitting. The member opposite does not believe that a married couple is a single economic unit. Yet now, the NDP is arguing that brothers and sisters or siblings are a single economic unit and should be allowed an exemption for this purpose. It would be interesting to hear the NDP explain this contradictory stance. How can it make a distinction between the two?
Bill C-661 would loosen the application of the anti-avoidance rule at a time when the government is trying to strengthen integrity of the tax system by closing loopholes that allow tax avoidance. The bill would provide a special tax benefit to a very small group of taxpayers in very specific circumstances.
Since 2006, our government has been working hard to promote the interests of our farmers and fishers. We also recognize that Canadians have the food choices they have thanks to the hard work of our farmers and fishers.
Through economic action plan 2015, Canadian farmers and fishers will be able to save more for their retirement through the increase in the lifetime capital gains exemption. Therefore, given all of the aforementioned consideration, we do not support the proposed bill and we encourage all members to vote against it.
