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Federal budget changes on capital gains will create many winners and losers among entrepreneurs, according to one business organization.
The Canadian Federation of Independent Business describes the changes as a “mixed bag” of news.
Atlantic Vice-President Louis-Philipe Gauthier said most small business owners will be unaffected or even come out ahead.
That is because the Lifetime Capital Gains Exemption is being increased to $1.25 million from $1 million, and a new incentive for some sectors will lower the capital gains inclusion rate to 33.3 per cent on the next $2 million.
However, Gauthier said the capital gains inclusion rate increase to 66.7 per cent will create many net losers, including owners of medium-sized businesses.
“It is going to be difficult for them because they are going to get taxed more,” Gauthier said in an interview on Wednesday.
“Ideally, you wouldn’t want to constrain a business while it’s growing and unfortunately that’s something that’s likely to happen, especially for those firms that are moving to a more medium-sized.”
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Elsewhere in the budget, Gauthier said they are also concerned that big deficits will continue for the next few years.
He noted that increasing the amount of debt will likely lead to higher taxes at some point in the future.
“People have to remember any time we add monies to the debt, we’re just shovelling it forward, so from that perspective, it is going to go down and hit future generations,” said Gauthier.
Meanwhile, the federation said it is happy that Ottawa will start returning the $2.5 billion in carbon tax rebates owed to small- and medium-sized businesses.
“It was long overdue,” said Gauthier, adding that more than 600,000 businesses across the country should benefit.
