July 21, 2021
The lifetime capital gains exemption (LCGE) is one of the key tax planning advantages available to small business owners, farmers, and fishers. In 2021, it can exempt from tax up to $892,218 of capital gains realized on the sale of shares of a qualified small business corporation and up to $1 million of capital gains realized on the sale of shares of a family farm or fishing corporation. Until recently, existing legislation made it difficult for children to use a corporation to buy shares of a small business, family farm, or fishing corporation from their parents, when their parents wanted to claim the LCGE on the sale of those shares. A private member’s bill was introduced in Parliament last year proposing amendments to the Income Tax Act to alleviate these difficulties. Private member’s bills rarely make it through the legislative process. However, on June 29, 2021, Bill C-208 received Royal Assent, making it the law (but see cautionary note below).