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Article by Johann Du Plessis, BComm, LLB, LLM (Tax)

Considering a move away from Canada? The tax implications are crucial to understand. Emigrating from Canada involves navigating complex tax rules that can significantly impact your financial planning.

 

We have been asked several times after the 2024 federal budget what the tax implications of emigrating from Canada will be. We do not specialize in emigration but decided to give a brief description to our clients of issues to consider. When a Canadian resident decides to emigrate, they are subject to certain tax implications that can significantly affect their financial planning. The primary consideration is the “departure tax,” which operates under the assumption that the individual has disposed of their property at its fair market value on the day they leave Canada.… [Read more]

A family trust can serve as a “highway” to move funds between your active business corporation and your other corporations. Trusts are very useful in succession planning and for funding an investment corporation or property corporation.

When your business has settled, is profitable, and you no longer need massive capital injections to grow the business, you should consider establishing a family trust as part of a tax efficient corporate structure. Contact our Business Tax Planning Team to learn how.

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If you are planning on selling your business in the future, you should be aware of the Lifetime Capital Gains Exemption on the sale of active small businesses.

When you sell a capital asset, such as shares of a company, that is usually taxed as a capital gain. However, when you sell shares of an active business, you may qualify for a tax incentive called the Lifetime Capital Gains Exemption, which allows you to claim almost $900,000 of the capital gain exempt from taxes. That means you can pocket up to $900,000 tax-free (although the alternative minimum tax can apply).

Owners of family businesses will gain new tax advantages from a bill that has just passed and is expected to come into effect shortly.

Currently, selling your business to a complete stranger gives you tax benefits that you would lose if you sold to a family member. Bill C-208 extends these benefits to cases where shares in an active business are transferred to a company that is owned by a child, grandchild, or sibling. The sale of shares would now be treated as a capital gain instead of a dividend, meaning you would be taxed at a lower rate and potentially be eligible for the lifetime capital gains tax exemption.… [Read more]

When your business is thriving, and you make more money than needed to cover your personal expenses, this is the time to consider incorporating your business (transferring your business to a company).

From a purely tax perspective, you do not want to be taxed on all your business income in your personal name. You are taxed more than 25% on the income from your business (It gets higher as you fall into higher income brackets), whereas your corporation will only be taxed 12% for the income earned in the corporation. That is a massive difference in dollars available for you to expand your business.… [Read more]