Bill C-208 Intergenerational Transfer Update

On July 19, 2021, the Department of Finance issued a press release clarifying their previous release of July 2, 2021. It notes:

  • The changes contained in the legislation now apply in law (as opposed to January 1, 2022 as indicated in the prior release).

  • The government intends to amend the legislation to safeguard against any unintended tax avoidance loopholes, such as the ability to “surplus strip”.

  • The draft legislative amendments would be brought forward for consultation.

  • The amendments would address items such as:

    • 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; and

    • the level of involvement of the child or grandchild in the business after the transfer.

  • Final legislative proposals which would apply as of the later of either November 1, 2021, or the date of publication of the final draft legislation.