Capital gains changes disproportionately impact engineering firms: ACEC-Canada
July 10, 2024
By CCE
Image courtesy ACEC-Canada.
The Association of Consulting Engineering Companies – Canada (ACEC-Canada) has expressed concern to the federal government about changes to the capital gains inclusion rate, which it says will have a disproportionate impact on small, employee-owned consulting engineering firms.
When finance minister Chrystia Freeland tabled the government’s 2024 budget in April, it included an increase in the capital gains inclusion rate to two-thirds for trusts and corporations and to two-thirds for individuals with capital gains exceeding $250,000 in a year.
ACEC points out these changes could directly impact its members who own shares in their firms, discourage employees from ownership and complicate firms’ succession plans. After consulting with its small firm committee, ACEC sent a letter to Freeland and revenue minister Marie-Claude Bibeau, calling for further consultation on the issue (you can read the letter here as a PDF file).
This outreach led to a meeting between Bibeau and her team, ACEC president and CEO John Gamble and representatives of small member firms, including Coles Associates principal Doug Coles, Grit Engineering founder and CEO Montana Wilson and Al-Terra Engineering president and CEO Sheldon Hudson. While the minister listened to the industry’s concerns, it was evident the government intends to proceed with the proposed changes.
The House of Commons’ finance committee, however, has launched a study to understand the impacts of the proposed rate increase. ACEC’s government relations (GR) team is now working to secure an appearance before the committee in the fall, when it resumes its work after summer recess.
In the meantime, ACEC encourages its member firms and their shareholders to seek professional accounting advice on the assumption the changes will be passed into law and could be retroactive to June 25, 2024.
