I provide corporate restructuring services to owner-managed businesses across Canada. When your business reaches a point where the existing share structure, corporate setup, or ownership arrangement no longer fits your goals, the reorganization has to be done properly. A misstep in how shares are issued, transferred, or redeemed can trigger tax consequences that undo the benefit of the restructuring itself. I bring over 30 years of experience in planning and implementing these transactions, with a focus on getting the tax result right the first time.
Expansion, growth, and shifting objectives all create situations where the current corporate structure stops working. Maybe you want to bring family members into the business. Maybe you need to protect accumulated assets from operational risk. Maybe a buyer has made an offer and the company is not structured to sell tax-efficiently.
Each of these situations requires a different approach, and each one has tax implications that need to be addressed before anything is signed or filed. That is the role of proper corporate restructuring advisory: identifying the right structure, planning the transition, and executing it in a way that holds up with both the CRA and, where applicable, the IRS.
My corporate restructuring consulting covers the following areas. Each engagement is specific to the client, but these are the situations I work on most frequently.
When an owner-manager wants to bring family members into the share structure, the first step is usually an estate freeze. Freezing the value of the present shareholder’s interest before issuing new shares avoids a conferral of existing value to the incoming shareholders.
Family shareholders may hold voting or non-voting, participating or non-participating shares, depending on the goals. The opportunity to split dividend income to lower-bracket family members can produce significant after-tax savings over time, particularly when dividends fund post-secondary education or other personal expenditures.
I advise on the share structure, prepare or review the required documentation, and coordinate with your lawyer on the legal implementation.
A family trust typically holds non-voting common shares while the original owner retains voting control. A properly structured trust gives the trustees discretion to allocate dividends or capital among beneficiaries, which accomplishes income splitting in a tax-efficient way. The T3 return for a family trust is due March 31st, with a calendar year-end in all cases.
Where the shares held by the trust qualify as qualified small business corporation shares (QSBC), each beneficiary may be entitled to their own lifetime capital gains exemption on a future sale. As of 2024, the LCGE was increased to $1,250,000 for QSBC shares, with annual indexation resuming in 2026. The current indexed amount should be confirmed at the time of planning.
I handle the tax planning, coordinate with your lawyer on the trust deed, and prepare the annual T3 filings.
Corporations that accumulate excess cash or investments beyond what the operations require can run into two problems at once. First, those passive assets are exposed to the same creditor risk as the operating business. Second, they can disqualify the company’s shares from QSBC status because more than 10% of the fair market value sits in assets not used in an active business.
I advise owners to transfer passive assets on a timely, tax-deferred basis to a separate holding corporation. This insulates the investments from the operating company’s liabilities and keeps the operating company’s shares eligible for the capital gains exemption.
When a third party makes an offer for the business, the company needs to qualify as a QSBC at the time of sale for the shareholders to claim their capital gains exemption. If the company does not qualify because of excess passive assets, the purification transaction described above may not work if it is done as part of the same series of transactions as the sale.
That means the purification needs to be in place well before any sale is contemplated. I advise clients to maintain QSBC status on an ongoing basis, or at minimum to ensure the shares have been QSBC-eligible for the required holding period before entering sale negotiations.
Beyond the areas above, my corporate restructuring consulting includes:
Succession planning and inter-generational transfers. Shareholder split-ups and asset spin-offs. Employee share acquisition plans. Capital gains crystallization strategies. Loss utilization through amalgamations and wind-ups. GRIP crystallization and secure loan-back arrangements. Capital dividend account distributions.
If your situation involves a cross-border element, I handle the Canadian and U.S. tax implications together. That is particularly relevant when a Canadian corporation has U.S. shareholders, U.S. operations, or U.S.-resident beneficiaries in a family trust.
Every restructuring starts with a conversation about what you are trying to achieve and what the current corporate structure looks like. I review the relevant facts, identify the tax issues, and outline the steps required to get from where you are to where you want to be.
I prepare a detailed plan, coordinate with your lawyer on the legal documents, and handle all tax filings and elections tied to the restructuring. You receive an instruction letter covering the full scope of the work.
Most restructuring engagements are completed within four to eight weeks, depending on the complexity of the share structure and the responsiveness of all parties. Fees depend on the scope of the reorganization, and I provide a clear estimate after the initial review.
Qualification depends on several factors, including what percentage of the company’s assets are used in an active business. If more than 10% of the fair market value of the company’s assets sits in passive investments, the shares may not qualify. I can review your situation and advise on whether purification is needed.
Yes. I prepare the tax plan and the instruction letter, and I coordinate directly with your lawyer on the legal documents, share issuances, and corporate filings. If you do not have a lawyer for this type of work, I can recommend one.