Corporate tax – Purchase and sale of a business
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General objectiveThe focus of this course will be on transactions between Canadian private business owners and/or their privately held corporations as well as issues arising from their dealing with family members, public corporations, and non-residents. Following introductory comments on commercial and tax due diligence issues, a discussion of technical and practical content on relevant rules, anti-avoidance measures, planning opportunities, and updates from government and the courts will be offered in the context of commonly used transaction structures and business vehicles. In particular, the session will explore separate and comparative material on “share deals” vs. “asset deals,” along with a presentation of issues common to both kinds of deals including high-level introductions to partnerships and unit trusts as alternative vehicles. Several hypothetical case studies will be reviewed to illustrate major concepts
The process of buying or selling a business in Canada, or transitioning it to one’s children or other successors, can constitute one of the most exciting yet stressful times in the life of entrepreneurs, their key executives, members of their families and their professional advisors. The purpose of this training activity is to alleviate some of the stress by providing an understanding and update of Canadian income tax issues for purchasers and vendors of businesses in Canada and their professional tax advisors.
By the end of the course, participants will be able to:
- explain and act on key income tax concepts that are most relevant to purchasers and vendors of businesses in Canada;
- identify, assess and address both pitfalls, and situations that offer opportunities for tax savings;
- be up to date on the most important recent legislative and interpretive changes to the rules.
- Commercial factors
- Motivations to sell/acquire
- Identifying interested/relevant parties
- Role of Tax Professionals
- Buying/selling assets vs. shares
- Personal & corporate income tax rates and integration
- Share Deals
- Purchaser – determination and tax treatment of purchase price, tax impact on acquired corporation, acquisition of control, asset basis bump, and dealing with non-residents and public corporations
- Vendor – determination and tax treatment of gain / loss on sale, capital gains deduction and deferrals / rollovers, pre-sale planning including s. 55, and dealing with non-residents and public corporations
- Asset Deals
- Accounts receivables
- Capital assets including depreciable property, goodwill / intangibles and real estate
- Dealing with Non-residents
- Allocation of the sale/purchase price among assets
- Tax status of vendors and purchasers
- Contingent liabilities
- Hybrid transaction example
- Intra-family and intergenerational transfers
- Related and affiliated persons
- Not dealing at arm’s length
- Price adjustment clauses
- The capital gains exemption and s. 84.1
- S. 55
- Other Issues
- Restrictive covenants - S. 68
- Interest expense
- Vendor take back financing
- Retiring allowances and IPP’s
- Employee share options
- Unit Trusts
This training activity will benefit practitioners, industry members, and owners / key executives in privately owned Canadian businesses, who are tax professionals and who want technical and practical knowledge of taxation issues relevant to the purchase and sale of a business in Canada.
Participants should possess a strong working knowledge of the Canadian Income Tax Act, and have experience in providing income tax advisory and compliance services.