NOTE: This course description has been revised and reflects updates for 2023. If you have any questions, please contact pdevents@cpaontario.ca

SCHEDULE

• December 19, 2023, 8:30am - 12:30pm
• December 20, 2023, 8:30am - 12:30pm

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 environmental 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. Several hypothetical case studies will be reviewed to illustrate major concepts.

Learning Objectives

By the end of this course, participants will be able to:

• Identify and act on opportunities to be of service to their 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 obligations
• 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

Topics Include:

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
• 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
• Price adjustment clauses
• The capital gains exemption and application of s. 84.1 after Bill C 208
• Application of S. 55 after Bill C 208

Other Issues

• Restrictive covenants - S. 68
• Interest expense
• "Excessive Interest & Financing Expense" Limitations (EIFEL)
• Mandatory Disclosure Rules
• Vendor take back financing
• Earnouts
• Retiring allowances and IPP's
• Employee share options
• Post-transaction Tax-On-Split-Income ("TOSI") considerations
• GST / PST
• 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

Prerequisite Knowledge

Access to a copy of the Canadian Income Tax Act and related technical research resources

Participants taking this seminar should:

• Posess a strong foundational working knowledge of the Canadian Income Tax Act, including related technical research skills;
• 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.