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By David Hodges on March 31, 2015
Estimated reading time: 1 minute

Save with family business tax planning

By David Hodges on March 31, 2015
Estimated reading time: 1 minute

If you own your own business you can save as much as $800,000 in capital gains tax

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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. » How to start your own business 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.

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