Should a Business Incorporate?
To incorporate or not incorporate, that is the question… a very common question that small business owners ask their trusted advisor. There are so many variables that come into play in this decision, so the answer is, it depends! Read on as we consider the factors to consider with a small business owner. Only then should the transition from sole proprietor or partnership to a Canadian Controlled Private Corporation (CCPC) be taken.
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https://www.cira.ca/blog/ca-domains/why-incorporating-important-can...
Why incorporating is important for Canadian businesses | CIRA
https://youtu.be/aPts1ypPv74
The lifetime capital gains exemption (LCGE) amount on the sale of qualifying small business shares is rising to $971,190 in 2023, up from $913,630 in 2022, an increase of $57,560, providing a great opportunity for tax savings for clients considering selling a business.
Clients who sold qualifying small business shares earlier in life, when the LCGE was set a lower level, can take advantage of any unused increased amount on any subsequent qualifying sale, Waters said: “It’s a lifetime limit.”
The higher LCGE amount will also be useful to business owners who wish to sell their business to their children, Bezaire said.
Last year, the federal government passed Bill C-208, which allowed business owners selling shares of their business to their child to take advantage of the LCGE on the proceeds of the sale. Before the change in law, the proceeds of disposition on a sale of a business to a child were taxed as a dividend.
Both Waters and Bezaire point out that the LCGE on the sale of qualified farm or fishing properties is $1 million, which is higher than the LCGE amount for the sale of qualifying small business shares. Once the LCGE amount for small business shares rises above $1 million, which may be as soon as 2024, the lifetime exemption for farms or fishing properties will rise to match the LCGE for small business shares, and remain indexed to inflation.
The lifetime capital gains exemption (LCGE) amount on the sale of qualifying small business shares is rising to $971,190 in 2023, up from $913,630 in 2022, an increase of $57,560, providing a great opportunity for tax savings for clients considering selling a business.
Clients who sold qualifying small business shares earlier in life, when the LCGE was set a lower level, can take advantage of any unused increased amount on any subsequent qualifying sale, Waters said: “It’s a lifetime limit.”
The higher LCGE amount will also be useful to business owners who wish to sell their business to their children, Bezaire said.
Last year, the federal government passed Bill C-208, which allowed business owners selling shares of their business to their child to take advantage of the LCGE on the proceeds of the sale. Before the change in law, the proceeds of disposition on a sale of a business to a child were taxed as a dividend.
Both Waters and Bezaire point out that the LCGE on the sale of qualified farm or fishing properties is $1 million, which is higher than the LCGE amount for the sale of qualifying small business shares. Once the LCGE amount for small business shares rises above $1 million, which may be as soon as 2024, the lifetime exemption for farms or fishing properties will rise to match the LCGE for small business shares, and remain indexed to inflation.
https://www.investmentexecutive.com/news/industry-news/indexed-tax-...