Nearly three-quarters of Canadian business owners are expected to exit their businesses by 2028. 1If you are part of this group, have you given thought to your succession plan?
While most entrepreneurs believe a transition process can be completed in two years or less, many experts suggest that succession planning can take up to five years to complete and — in the case of a family business — as many as ten.2
Here are six questions to start the thinking process as you plan ahead for your business' succession:
These are just a handful of considerations that are intended to start the thinking process. Given our familiarity with your financial position, we can help recommend experts who can support your business succession planning. Please don’t hesitate to call.
Keeping a business in the family has become easier and less costly. Last year, Bill C-208 was passed.* Before this, the Income Tax Act treated the proceeds of intergenerational sales as deemed dividends to the vendor, whereas sales to third parties were treated as lower-taxed capital gains that could be used against the LCGE.** Bill C-208 eliminates this treatment and also enables corporate reorganizations among siblings to take place without being subject to anti-avoidance rules in certain circumstances.
*BillC-208receivedroyalassentonJune29,2021.
**LifetimeCapitalGainsExemption.However,BillC-208reducesaccesstotheLCGEiftaxablecapitalinvolvedexceeds$10million;at$15millionormore,thereisnoaccessatall.
Disclaimers
Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by author. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements.
The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. These estimates and expectations involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Echelon Wealth Partners Inc. is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund.
Please note that only Ventum Financial is a member of CIPF and regulated by IIROC; Chevron Wealth Preservation Inc. is not. ** Insurance products and services are offered by life insurance licensed advisors through Ventum Insurance Services a wholly owned subsidiary of Ventum Financial Corp.