Tax Planning

When selling your business what is important is how much money you will actually receive. Between you and the sales dollars is Canada Revenue. Yes tax.

A proper tax plan should be installed well in advance of the sale of the company.

Is it going to be an assets sale or a share sale? There is a big difference in the potential tax owing.

One huge tax advantage that all sellers strive for is the 900K plus Capital Gains deduction. Each individual is entitled to this tax exemption as long as the corporate shares are eligible. CRA has very strict rules as to whether the company being sold is eligible for this large tax break. This is why sellers always want a share sale.

We review the corporate financial statements to determine if the corporation is eligible for this deduction.

If the company is not eligible then we will recommend a course of action to make it eligible. This is a two year process but it is usually well worth it.

Many sales end up being an asset sale. If this is the case then the taxation can get quite complicated. There can be tax at the corporate level then tax at the personal level. A solid tax plan needs to be put in place to identify the tax burden and make sure there is no duplication.

Taxation can take away a good part of the money transacted. So start your tax planning now.