Tax Reorganization for Tax Planning in Canada

Tax reorganization for tax planning often makes use of the establishments of the Tax Act’s section 85. The tax rollover in section 85 is a delayed transaction in which one part, corporation, or an individual, transfers shares or assets to a company in exchange for shares of the transferee company. It’s a complicated transaction that requires the experience and expertise of tax lawyers.

The reasons for tax reorganization

  • Accessing the company’s losses
  • Developing the monetary gain exemption
  • Ensuring to retain the company’s eligibility as a small business for monetary gain exemption.
  • Withdrawal of one of the company’s shareholders
  • Company’s break up into several shareholders
  • Making the corporate structure simple
  • Tax Reorganization for Estate and Tax Planning

    Estate planning is a specialized kind of tax planning reorganization that usually involves either a section 86 internal reorganization or a section 85 rollover.

    Tax Reorganizations for Creditor Proofing

    Tax reorganization for a company can be undertaken to protect assets from future creditors. It’s vital to make sure that all critical creditor protection laws conform, as the transactions that are done to beat existing creditors can be contested under various provincial laws.

    This type of tax planning reorganization will also use rollovers that fall under section 85. Therefore, these tax reorganizations won’t have negative tax consequences to the parties involved.

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    Tax Reorganizations for Equity to Employees

    When a worker, typically a senior one, is given a significant percentage of the corporation, the company’s tax reorganization will be undertaken by a tax lawyer. This tax reorganization is to let the worker invest in the company’s future at a low cost instead of purchasing into the current corporate equity.
    Tax reorganization carried out well, according to section 86, won’t have adverse tax consequences to the investor if the process is carried out correctly. One group shared with an adapted cost base and paid capital will convert into more than one group of shares with the same company.
    Are you looking for experienced and reliable tax consultants, Faber can help. We’ve been in the industry for the past 20 years. We’ve worked with several clients, providing top-of-the-line tax advisory services. Our team works tirelessly to help clients achieve success. 
    Get in touch with our experts in Edmonton, Alberta today at 780-432-5262, and book an appointment.