The Federal Government has backtracked on its plan to delay the application of Bill C-208, a private member's bill aimed at facilitating intergenerational transfers of small businesses and farms. Until at least November 1, 2021, owners of small businesses and farms can rely on the relieving legislation for genuine intergenerational transfers.
Bill C-208 received Royal Assent and became law on June 29, 2021. The next day, the Government put the legislative amendments in limbo with a news release announcing its intention to delay the application of the Bill until the start of next year, January 1, 2022. The Government had previously expressed concern that the Bill could allow for unintended and aggressive tax avoidance in some situations. It was expected, at the time, that the Government would use the period of delay to introduce additional or revised legislation on this issue.
On July 19, 2021, the Federal Government reversed course and issued a news release to affirm the enactment of the Bill and acknowledge that the changes to the Income Tax Act are now fully effective. The Government confirmed that it still intends to bring forward legislative amendments to "honour the spirit of Bill C-208 while safeguarding against any unintended tax avoidance loopholes"; however, the amendments will not apply retroactively as previously indicated. According to the news release, any amendments will only apply as of the later of November 1, 2021, or the date of publication of the final draft legislation. As a result, the provisions of Bill C-208 can be relied on immediately to facilitate intergenerational transfers of small businesses and farms.