Skip Breadcrumb Links
Commercial Banking > Business Succession > Tax Strategies

Tax Strategies

A layer of complexity is created as the value of your business assets transitions into your personal investments. Tax laws and regulations may be complex, requiring advice from a qualified tax advisor or consultant. Some of the tax strategies to discuss with your tax advisor when transitioning your business are:

Description	Key Benefits
Capital Gains Exemption
The seller may be able to claim a lifetime capital gains exemption of $750,000 on the sale of shares	Potential tax savings on sale of shares
Estate Freeze
Original common shares exchanged for new fixed value preferred voting shares	May reduce tax liability of original owner on death
Family members (or trust) issued new common shares with nominal value	Owner and/or family members may each be able to use the $750,000 capital gains exemption
New common shares have potential to grow in value in the future	Allows for greater span of ownership
Tax liability of original shareholder is capped at value of newly received preferred shares	Facilitates income splitting
Holding Company
Places a layer between individual owner(s) and the operating company	Potential for income splitting with adult family members
Often a key component of an Estate Freeze	May qualify for the $750,000 capital gains exemption
Often used to hold non-operating assets such as excess cash / investments outside the operating company	May be helpful in asset protection from creditor claims against the operating company
Often used to distribute the ownership interest more broadly among family members
Family Trust
Often used in conjunction with an Estate Freeze to allow family members to have an indirect ownership of a business	Maintenance of control
Provides trustee with control over business and distributions to beneficiaries	Potential for income splitting with named beneficiaries or defined classes of beneficiaries
	Useful for eventual family succession planning
	May reduce probate fees

Remember your cross-border assets.

If you have business assets outside of Canada, you may find their sale to be taxable in that jurisdiction. Furthermore, the proceeds received on the disposition of foreign assets may trigger a second tax upon their return into Canada. Tax and legal professionals with experience in multinational transactions can suggest ways to minimize double taxation and smooth the transition of assets on your death.

Tax Strategies

Capital Gains Exemption

Estate Freeze

Holding Company

Family Trust

Remember your cross-border assets.

Contact Us

Related Links

Contact Us

Tools

Services

Security Centre

Top 10 Questions: