An important exception to the tax on split income (TOSI) rules is a capital gain that is eligible for the capital gains exemption (QSBC). Planning for this QSBC shares has become very important in private company planning. This three-hour course shall focus on common corporate reorganizations in the owner/manager context that promote and enhance the capital gains exemption. In particular, the seminar will describe the significant income tax advantages of two classic corporate structures, the “Single Holdco” and the “Double Holdco”. The tax traps involved in the implementation of such structures will also be discussed.
- Single Holdco (for Related Shareholders)
- Double Holdco (for Unrelated Shareholders)
- Tax Advantages:
- Income Splitting
- Multiplication of Capital Gains Exemption through a family trust
- Purification outlet for Capital Gains Exemption
- Implementation Steps (“Breaking Up is Hard to Do”)
- Related Party Butterfly 55(3)(a)
- Unrelated Party Butterfly 55(3)(b)
- Tax Traps
- Purification Trap for CGE: watch out for inter-corporate debt!
- Subsection 55(2)
- Corporate Attribution under section 74.4
- HST Trap
Manu Kakkar CPA, CA, TEP, MTAX
Manu has over 20 years of experience in taxation in both domestic and international, personal and corporate taxation as well as litigation support. He runs his own independent tax practice with offices in Montreal and Toronto, serving a diverse client base which includes manufacturing, retail and distribution, construction, farming, real estate, athletes and artists, across Canada and the US. His firm acts as a counsel to over 100 professional firms in Canada and USA specializing in domestic and international reorganizations and transactions. Manu is known as one of the leading experts in Section 55 of the Act and butterfly reorganizations.