Purchase And Sale Of Businesses

Introduction

Tax-Efficient Solutions for Buying or Selling a Business

The purchase or sale of a business carries material income tax, capital gains, and indirect tax consequences. Transaction structure directly affects tax recognition under the Income Tax Act, including capital cost allowance recapture, eligible capital property treatment, goodwill taxation, and access to exemptions or deferrals. SGA Tax advises clients on asset versus share transactions, purchase price allocation, section 85 rollovers, and related structuring considerations to protect after-tax value while remaining aligned with CRA technical positions.

These services support Canadian-controlled private corporations, family enterprises preparing for succession, investors acquiring operating businesses, and founders exiting ownership. Without planning, sellers may forfeit access to the Lifetime Capital Gains Exemption or face double taxation on non-qualifying assets. Buyers risk inheriting unfavourable tax attributes, undisclosed liabilities, or missed GST/HST elections, such as subsection 167(1) filings using Form GST44. SGA Tax assists with tax due diligence, working capital adjustments, and valuation coordination to ensure transactions reflect fair market value and comply with statutory requirements.

A common misconception is that tax consequences can be addressed after a purchase agreement is signed. In practice, early planning is essential to manage reassessment risk, structure purchase price allocation, preserve tax attributes, and address goodwill or contingent consideration. Share sales are not inherently superior to asset acquisitions without reviewing adjusted cost base, loss utilization, depreciation history, or shareholder loan treatment. SGA Tax supports informed decision-making before execution, ensuring transactions remain defensible, efficient, and compliant.