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Tax Efficiency When Selling a Business

Case Study | Mar 13, 2015

The Problem

A successful business owner negotiated a deal to sell the assets of his business. The seller was pleased with the sale price but disappointed at the amount of tax he would have to pay.

Our Approach

We restructured the deal as a share sale through a reorganization that brought in the founder’s spouse and other family members as additional sellers. This allowed us to use certain provisions of the Income Tax Act that enable shares of a “qualifying small business corporation” to be sold without capital gains tax up to a maximum of $800,000 per individual in certain circumstances.

The Result

The restructuring resulted in much greater net proceeds to the seller and his family and a lower purchase price for the buyer.

© 2015 Lawrence, Lawrence, Stevenson LLP

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