You can save up to $800,000 in taxes with your family business (Getty Images / Paul Bradbury)
Want to save $800,000 in capital gains? Well here’s some good news: the government likes to encourage small business, so they’re willing to give you a one-time $800,000 capital gains exemption when you sell. Even better, this lifetime exemption isn’t limited to one family member—a boon for small businesses that will incur more than $800,000 in capital gains when sold. That $800,000 figure can be claimed by any family member with an ownership stake in the business provided they’ve held shares in the company for at least two years. So if a husband, wife and daughter each owned one-third of a family business, they would all be exempt—even if the sale of the business created $2.4 million in capital gains. Before you sell, just make sure you meet Canada Revenue Agency’s definition of a qualified small business, farm or fishing property.
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Tax savings: On the disposition of qualified property, the $800,000 exemption would reduce your taxable income by $400,000. That could save you upwards of $200,000 in taxes or more, depending on your tax bracket and province.
