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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Canada Tax
Satisfied Customers: 1561
Experience:  Tax preparer with 23 years experience, including US/Canada tax returns.
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CAPITAL GAINS TAX QUESTION Is it correct that if I were to

Customer Question

Is it correct that if I were to sell 100% shares in my business AFTER the Budget in mid-March 2016, 10% capital gains tax on profits is payable, but if I sell only part of the shares, e.g 75% of the shares in my business, then 28% capital gains tax on profits is payable?
I have a couple of other questions but I have to have the answer to the above, urgently.
Submitted: 1 year ago.
Category: Canada Tax
Expert:  PDtax replied 1 year ago.

Hi from just answer. I'm PDtax. I'll assist.

Expert:  PDtax replied 1 year ago.

The capital gains rate can be as much as 23.8% currently, depending on your income in the year of sale. The 10% rate might be applicable to capital gains at a much lower income level.

The change in rate is only proposed by the president. It is not law yet.

Hope that clarifies things for you. Positive feedback is appreciated. I'm PDtax.

Customer: replied 1 year ago.
You have not answered my question. Please read the question again. You missed the point! I did not ask you what is the rate of CGT now or after the budget.What I asked you is whether after next Budget in March 2016 there is a difference if I sell all, i.e. 100% of the shares in my company or only part, e.g. only 75% of the shares.
In a casual conversation with an accountant who specialises in taxation, he told me that I have to sell 100% of the shares in my company after the next Budget, otherwise I will have to pay 28% CGT instead of 10%.
Expert:  PDtax replied 1 year ago.

I was responding to US budget proposals, and I think you are asking about Canadian budget changes to occur at the same time.

I'll opt out, and a Canadian tax expert can assist.

Expert:  Arthur Rubin replied 1 year ago.

I'm sorry, but the 10% and 28% in your initial question only appear in US Tax treatment, not in Canadian tax treatment. However, I see nothing in the budget proposal (as of January) which would make any change in the difference between selling your entire business and selling part of your business.

As for the timing, even if there were a difference, the tax change could be retroactive to the start of 2016, rather than only being effective as to the date of passage of the budget (or any other date specified in the budget).