Bill C-208 was granted Royal Assent on June 29, 2021. It amended the Income Tax Act (ITA) to provide tax relief to families who wish to transfer shares of small businesses or family farm and fishing corporations to their children. The Department of Finance issued a news release on June 30 to announce its intention to delay the effective date of these amendments to January 1, 2022 due to concerns with the language of the bill. Presentation, and that these amendments would address the following issues:
- The requirement to transfer legal and factual control of the corporation carrying on the business from the parent to their child or grandchild
- The level of ownership in the corporation carrying on the business that the parent can maintain for a reasonable time after the transfer
- The requirements and timeline for the parent to transition their involvement in the business to the next generation
- The level of involvement of the child or grandchild in the business after the transfer
The Department of Finance issued a press release on July 19, 2021 confirming that the provisions of Bill C-208 can be used immediately to facilitate intergenerational transfers of shares of small businesses or family farm and fishing corporations. Some practitioners have encouraged their clients to utilize the opportunity immediately, while others have taken a more conservative “:wait-and-see” approach and are awaiting the amendments.