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Some recent changes by the federal government on the Canadian Entrepreneurs\u2019 Incentive (CEI) \u2013 measure that was proposed in the budget to offset some of the negative impact of the increase in the capital gains inclusion rate \u2013 is a step in the right direction but more change is needed, according to the Canadian Federation of Independent Business.\u00a0<\/p>\n
The national organization said CEI will reduce the amount of capital gains paid by some business owners when they sell the shares of their business.\u00a0<\/p>\n
While these changes do not fully offset the negative impact of the hike in the inclusion rate, CFIB said it is pleased that the government moved forward on three of CFIB\u2019s top four proposed amendments:<\/p>\n
1.\u00a0 \u00a0 Farmers and fishers selling property will now have access to the program (only those selling shares were included before). Personal services businesses will also now have access to the incentive.<\/p>\n
2.\u00a0 \u00a0 The founder rule has been dropped, allowing those who invest later to benefit.<\/p>\n
3.\u00a0 \u00a0 The incentive will be phased in over five years, rather than 10.<\/p>\n
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\u201cThese are all good moves, but the government did not move on one of the most critical changes \u2013 the need to expand the CEI to all entrepreneurs. It appears hundreds of thousands of small businesses will continue to be specifically excluded, including owners of restaurants, hotels as well as those in finance, insurance, real estate, arts, entertainment, recreation, and professionals like doctors, lawyers, accountants. It makes no sense to have a different tax treatment between a retail shop and a local restaurant,\u201d said Dan Kelly, President and CEO of the CFIB.<\/strong><\/p>\n \u201cThe CEI itself is a positive measure. While the new amendments will help many, they will not benefit the many business owners who sell their assets rather than shares (other than farms\/fishers) or those who have capital gains within their corporations. For them, the increase in the inclusion rate will hit hard. CFIB will continue to push Ottawa to reverse the hike in the inclusion rate and expand the CEI to all SMEs.\u201d<\/p>\n Council of Canadian Innovators President Benjamin Bergen<\/strong> said:<\/p>\n \u201cSince the federal budget\u2019s release, Canadian business leaders have urged the government to reverse its proposed tax changes to capital gains and instead support strategies that build lasting wealth and prosperity.<\/p>\n \u201cThe tweaks to the CEI announced today fall short of addressing the harm caused by the government\u2019s tax plans on Canada\u2019s innovation economy. CCI continues to call for a full reversal of the government\u2019s plan because taxing our way to prosperity isn\u2019t a viable path.<\/p>\n \u201cIn CCI\u2019s recent pulse check survey, 90 per cent of Canadian innovators expressed concern that the tax hike will harm the economy, with reduced access to skilled talent and growth capital cited as the primary risks. Furthermore, the Parliamentary Budget Office estimates that the government\u2019s projections from this tax hike won\u2019t deliver the expected windfall. There is neither a political or economic case for these changes any more.<\/p>\n \u201cHalf-measures, piecemeal incentives, and misguided strategies will not drive the growth Canada needs. Canadians deserve bold, forward-thinking economic policies that actually foster growth and give companies the talent and capital they need to scale. It\u2019s time for the government to stop taxing ambition and start working with innovators to tackle Canada\u2019s productivity and prosperity challenges. The current path is not just misguided\u2014it\u2019s a dead end.<\/p>\n \u201cCCI has always taken pride in working constructively and substantively with Canadian governments, co-developing policies and strategies to ensure that our economy is on the best possible footing for the 21st century innovation economy. We will continue to do this work as we participate in the upcoming consultations.\u201d<\/p>\n Recently, the federal Department of Finance new enhancements to the Canadian Entrepreneurs\u2019 Incentive, to ensure innovators and small business owners, including farmers, \u201care rewarded for their hard work.\u201d<\/p>\n![\"\"](\"https:\/\/retailinsider.b-cdn.net\/wp-content\/uploads\/2024\/08\/Benjamin-Bergen.jpeg\")
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