Tax aspects of purchase and sale of businesses

Before venturing into acquiring or selling a business, it is crucial to analyse and to discuss the tax consequences of such a transaction, the tax aspect being as important as the commercial one and having a determining influence on the form the transaction will take, from both the point of view of the seller and that of the purchaser.

It is crucial to determine if you should sell the assets or the shares of the business and to structure the method of payment so as to reduce or defer taxes. If you are the seller, you should try to benefit from certain tax deductions such as the capital gains deduction.

If you are the buyer, it is important to understand all future tax consequences, of either the purchase of assets or the purchase of shares in order to minimize taxes payable in the day-to-day business or in the case of an eventual sale.

How we help you:

Purchase of assets or purchase of shares: The sale of assets takes place between the corporate entity and the buyer and triggers different tax consequences from those resulting from the sale of shares, which takes place between the buyer and the seller. If you intend to purchase or sell a business, it is essential to consult a professional in order to carry out the transaction that will prove most favourable.

Tax deferral: If you intend to sell your business and to reinvest the proceeds in a new one, it is possible to transfer the taxes payable on the capital gain generated by the sale to the new business when certain conditions are met.

Acquisition of control: Upon the sale of a business, it is important to pay particular attention to the acquisition of control rules which can have a significant impact.

Did you know that...

The sale price of a business’s assets must be reasonably allocated to the assets sold?

Did you know that ...

The sale price of a business’s assets must be reasonably allocated to the assets sold.

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2008 August 18

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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