Corporate Tax — Purchase and Sale of a Business

EVENT DESCRIPTION

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NOTE: This course description has been revised and reflects updates for 2022. If you have any questions, please contact pdevents@cpaontario.ca

SCHEDULE

This course offers practitioners, business owners and other tax professionals relevant technical and practical knowledge of important income tax considerations for when it is time to buy, sell, or undertake an intergenerational transfer of a private Canadian business.

Merger and acquisition activity in Canada continues to thrive, notwithstanding profound circumstantial changes. 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 seminar 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.

The focus of this seminar 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 seminar 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.

CONTENT

• Commercial factors
• Motivations to sell/acquire
• Identifying interested/relevant parties
• Valuation
• Financing
• Role of Tax Professionals
• Buying/selling assets vs. shares
• Impact of pandemic-related government assistance and other consequences
• 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
• Inventory
• Capital assets including depreciable property, goodwill / intangibles and real estate
• Dealing with Non-residents
• Allocation of the sale/purchase price among assets
• Sale and leaseback transactions
• 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
• The capital gains exemption and s. 84.1
• S. 55
• Other Issues
• Restrictive covenants - S. 68
• Interest expense
• Vendor take back financing
• Earnouts
• Retiring allowances and IPP’s
• Employee share options
• Partnerships
• Unit Trusts
• Post-transaction Tax-On-Split-Income considerations
• GST/PST

KEY TAKEAWAYS

• Identify and act on opportunities to be of service to your clients as potential private purchasers and vendors of businesses in Canada, in a manner that is consistent with codes of ethical business culture and professional independence / conflict of interest.
• Comprehend, explain and act on key income tax concepts that are most relevant to purchasers and vendors of businesses in Canada prior to a proposed transaction, at the time of a transaction, and at times subsequent to the transaction.
• Participate meaningfully in negotiations on behalf of buyers or sellers in negotiating transaction structure and assessing impact on taxes to both sides.
• Identify and assist with related tax compliance.
• Identify, assess and address both pitfalls, and situations that offer opportunities for tax savings.
• Apply the most important recent legislative and interpretive changes to the rules in delivering planning and other advice, and related compliance services.

PREREQUISITE KNOWLEDGE

Possess a strong foundational working knowledge of the Canadian Income Tax Act, including related technical research skills; and

Have several years of experience in providing Canadian income tax compliance and advisory services

WHO 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 and updates in taxation issues relevant to the purchase and sale of a business in Canada.

PRICING

Status: Registration closed on May 25, 2023

LOCATION

Online

SPEAKER(S) BIO

Karen Wilkinson, FCPA, FCA is President of Karen Wilkinson Professional Corporation. She was previously a Tax Partner with Deloitte LLP with over 25 years of tax experience. Karen's practice is focused on assisting private companies and their owners in maximizing wealth and transitioning the business to the next generation. While at Deloitte LLP, Karen was the Chief Learning Officer for the Canadian tax practice for 9 years. She has been involved in the delivery of all aspects of the CPA Canada In-depth tax program and is a former lecturer for the CPA Canada Income Tax for the General Practitioner course. Karen graduated from the University of Waterloo with a Master of Accounting degree. Karen has been very involved in the community over the years currently serving as a member of the Board of the Kitchener Waterloo Symphony Association and the Treasurer at Orchestras Canada. Prior community involvement has included the Board of Governors at the University of Waterloo and United Way of Cambridge and North Dumfries.