LEGAL COUNSEL FOR TAX PLANNING + TRANSACTIONS
Taxes play an important role in the global economy, and as such have become a necessary evil in the corporate business world. For whereas every business must pay its requisite tax liability, there is nothing that requires a company to pay in excess of what the law requires. As such, structuring one's business operations and commercial transactions to minimize taxes, when done in compliance with applicable laws and regulations, is an intelligent exercise in business and financial management.
Meeting this challenge, such that your company remains compliant with pertinent tax laws, regulations and legal interpretations thereof, while optimizing its profitability, is an undertaking that should be pursued in conjunction with knowledgeable tax lawyers who are committed to the dual pursuits of strict legal compliance and permissible tax minimization strategies. Attempting to undertaking tax structuring that is not compliant with the law is a recipe for disaster and should not be the route of any business.
The reality is that tax authorities the world-over are becoming increasingly effective in detecting and pursuing deceptive and illegal tax-related activity, with the penalties being significant and the disposition of those misappropriate tax savings making it exceedingly difficult to repay those tax authorities the taxes that are owing, together with interest and penalties. As such, tax compliance needs to be an integral component of corporate tax strategy.
Neufeld Legal P.C.
At Neufeld Legal P.C., we work with corporate businesses to optimize, strategize and implement both long-term and transactional tax planning; however, we do not undertake tax litigation or tax disputes. Our legal team works on proactive tax measures, as opposed to reactive tax matters where previously developed and implemented tax matters come under legal scrunity by the relevant tax authorities.
To learn how we can be of assistance, contact Neufeld Legal P.C. by telephone at 416-887-9702 (Toronto + Ontario) or 403-400-4092 (Calgary + Alberta); email at Tax@NeufeldLegal.com; or Skype at Christopher.Neufeld.
Section 85 Corporate Rollover (ITA)
85. (1) Where a taxpayer has, in a taxation year, disposed of any of the taxpayer’s property that was eligible property to a taxable Canadian corporation for consideration that includes shares of the capital stock of the corporation, if the taxpayer and the corporation have jointly elected in prescribed form and in accordance with subsection 85(6), the following rules apply:
(a) the amount that the taxpayer and the corporation have agreed on in their election in respect of the property shall be deemed to be the taxpayer’s proceeds of disposition of the property and the corporation’s cost of the property;
(b) subject to paragraph 85(1)(c), where the amount that the taxpayer and the corporation have agreed on in their election in respect of the property is less than the fair market value, at the time of the disposition, of the consideration therefor (other than any shares of the capital stock of the corporation or a right to receive any such shares) received by the taxpayer, the amount so agreed on shall, irrespective of the amount actually so agreed on by them, be deemed to be an amount equal to that fair market value;
(c) where the amount that the taxpayer and the corporation have agreed on in their election in respect of the property is greater than the fair market value, at the time of the disposition, of the property so disposed of, the amount so agreed on shall, irrespective of the amount actually so agreed on, be deemed to be an amount equal to that fair market value;
(c.1) where the property was inventory, capital property (other than depreciable property of a prescribed class), a NISA Fund No. 2 or a property that is eligible property because of paragraph 85(1.1)(g) or 85(1.1)(g.1), and the amount that the taxpayer and corporation have agreed on in their election in respect of the property is less than the lesser of
(i) the fair market value of the property at the time of the disposition, and
(ii) the cost amount to the taxpayer of the property at the time of the disposition,
the amount so agreed on shall, irrespective of the amount actually so agreed on by them, be deemed to be an amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and 85(1)(c.1)(ii);
COMPLETE I.T.A. SECTION