Tax aspects of corporate reorganisations

Corporate reorganizations may generate tax consequences, which can be more or less considerable. Most of the time, it is possible to avoid or at least defer those consequences with an appropriate planning.

Share exchanges or share conversions, in the context of a reorganization of capital, may, under certain conditions, be carried out without any tax impact. The tax consequences ensuing from a sale of assets or shares, to a taxable Canadian corporation, can be deferred by complying with the rules that apply in this regard. A merger between a corporation and its subsidiary, in which the former holds an interest of at least 90%, may essentially be carried out without any tax consequences. The same applies to the liquidation of a subsidiary in which the parent company holds an interest of at least 90%.

In the area of reorganizations, LJT’s tax team has acquired a great deal of experience in implementing many structures involving corporations, partnerships (LPs and GPs) and trusts. Whatever your needs in this regard, our lawyers will be able to design and recommend the most advantageous tax solutions.

How we help you:

Tax roll-overs: It basically consists of sales of shares or assets whereby the tax consequences are deferred. We will assist you in establishing the proper value for tax purposes and will prepare the necessary documents to allow you to obtain the maximum benefit from the tax provisions permitting roll-overs.

Reduction or increase of a corporation’s capital: These operations can result in deemed dividends that are taxable for the shareholders. Consult us before carrying out such operations: we will suggest the most tax-efficient approaches.

Non-taxable dividends from the capital dividend account: A corporation can pay out tax-free dividends from its capital dividend account. In order to declare such dividends, the corporation must calculate the balance in its capital dividend account and file the appropriate election with tax authorities. Our tax professionals will explain in greater detail the method for calculating the capital dividend account balance along with interesting tax strategies pertaining to the use of capital dividends.

Partnerships: A limited partnership or general partnership can be created and integrated in an existing corporate structure without tax consequences. Our tax professionals will be able to assist you in this respect.

Did you know that...

A simple modification of the characteristics of shares issued by a corporation can trigger tax consequences?

Exchanging shares of a corporation in return for other shares of the same corporation, does not constitute a disposition of shares for tax purposes under certain circumstances?

Did you know that ...

Exchanging shares of a corporation in return for other shares of the same corporation, does not constitute a disposition of shares for tax purposes under certain circumstances.

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Team

Marc-André Beaudoin
Lawyer
Isabelle Caron Dorion
Lawyer / Tax Expert
Éric Forget
Partner , Lawyer / Tax Expert
Jonathan Haran
Partner , Lawyer / Tax Expert
Nader Khalil
Lawyer / Tax Expert
Sophie Rivest
Notary / Tax Expert
Benoît Therrien
Partner , Lawyer / Tax Expert
Robert Thiffault
Managing partner , Lawyer / Tax Expert
Michel Turcot
Partner , Notary