Tag archives: Income Tax Act

Incoming legislation implements common reporting standards

On July 1, amendments to the Income Tax Act (Canada) implementing international common reporting standards (CRS) will come into force. The CRS regime is intended to facilitate the exchange of taxpayer information between governments. Financial institutions will be required to report financial information about individuals and entities not resident in Canada[1] to the Canada Revenue … Continue reading

M&A: the subsection 20(24) election

In a business acquisition transaction, it is not uncommon to find an assumption by the purchaser of the obligations of the vendor to deliver goods or perform services in the future for which the vendor has already received payment. In such a scenario, there are two possible outcomes from a tax perspective, as set out … Continue reading

Applicability of the capital gains exemption in M&A

Individuals selling their business often think of using the capital gains exemption to help keep the tax man at bay. Undoubtedly, this tax exemption is a useful tool when an individual is thinking of selling shares in their business, however, there are several conditions that must be satisfied before this exemption applies. The following is … Continue reading

Avoiding tax traps: don’t forget about non-competition agreements

Non-competition agreements can be a valuable tool for purchasers who want to protect their investments in new businesses. However, non-competition agreements can have unintended and unexpected tax consequences, particularly to sellers who grant non-competition agreements to purchasers. The Income Tax Act (Canada) (the Act) contains specific provisions regarding the taxation of “restrictive covenants”, a broadly … Continue reading

Federal elections: not the political kind

In this article, we highlight joint tax elections companies should consider filing in asset purchase transactions in Canada. These elections will not only save companies time, but they will also relieve taxpayers from hassles down the road. A GST/HST election under section 167 of the Excise Tax Act (Canada) is one of the most commonly … Continue reading

Limiting tax exposure on an acquisition by share purchase

One characteristic consequence of a share sale is, generally, that the vendor realizes a capital gain. Canadian resident shareholders are generally taxed on half of the amount of the capital gain. If available, the cumulative lifetime capital gains exemption can shelter all or a portion of the capital gain, reducing the overall tax bill of … Continue reading

Tax considerations in M&A for purchasers dealing with non-resident vendors

If a non-resident vendor sells property, one consideration that a purchaser must be cognizant of is whether that property constitutes “taxable Canadian property” under the Income Tax Act (Canada). If the property is taxable Canadian property and the vendor does not obtain a certificate of compliance (discussed below), generally the purchaser must withhold 25% of … Continue reading
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