Ensuring Co-operative Entrepreneurs and Their Related Canadian-Controlled Private Corporations Can Access the Small Business Deduction (SBD)

CMC is asking that the Government of Canada ensure that entrepreneurs and businesses are not penalized when claiming the Small Business Deduction (SBD) simply because they are members of a co-operative operating in sectors other than agriculture and fisheries.  

In 2016, with the passage of Bill C-29, the federal government brought in measures aimed at preventing multiplication of benefits derived from the SBD. An unintended consequence was that the provisions penalized co-operatives and Canadian-controlled private corporations (CCPCs) that are members of co-operatives or whose shareholders are members of co-operatives, because they are now deemed to be a related party. Although co-operatives and their members were not specifically targeted by these measures, they were affected and continue to operate with these financial consequences.  

The amendments that were adopted in 2017 and 2019 were welcomed, but these only resolved the issue for those involved in farming and fishing. However, this was not the case for those operating in other industries. 

Building on the prior amendments noted above along with work by the Joint Committee on Taxation of the Canadian Bar Association and the Chartered Professional Accountants of Canada, CMC is advocating for further amendments to under Section 125 of the Income Tax Act, to address the concerns related to the statutory language that is at the root cause of the eligibility issue.