An article in the May 21st Globe and Mail drew attention to a tax change taking effect January 1st, 2017 which will affect sellers of small businesses. There are two ways to buy (or sell) a business: one is an asset sale where the buyer gets only the assets but not the liabilities; the other is a share sale where the buyer is, in effect, doing a takeover and gets all the historical obligations as well as the assets.
The are tax advantages and disadvantages to each approach, and weighing the options requires the advice of a tax professional. What appears clear, however, is that the tax changes will make the treatment of asset sales less favourable starting in the new year.
The implication for investors is that the pending change may push some business owners, currently sitting on the fence, to go ahead and sell their businesses before January 1st.