Tax Seminar by Accountant in Mississauga

On March 3, Madan Chartered Accountant in Mississauga, Scotia McLeod and Campbell & Partners LLP held a joint seminar on Succession & Estate Planning.

The seminar topics included:

• Objectives of Succession & Estate Planning
• Family Transfers
• Estate Freezes
• Sale to third party
• Employee/Management Buy-Out

Plan for Succession Now – Says Accountant Mississauga

You should plan for the succession of your business now, so that you’re well prepared when the time comes to pass on the business to children, or to sell your business to a third-party or employees. As Accountants in Mississauga, we have seen many businesses being sold for far less than they are worth because the succession process was planned poorly.

Objectives – Succession and Estate Planning

The objectives of the succession and estate planning process include:

• To maintain family harmony
• To provide source of income for owner and/or family members
• To maintain the value of business
• To minimize tax upon death

Updating your will can be a sensitive and tricky process. Which family members will receive the business assets? How about life insurance proceeds and other assets that you own? Maintaining family harmony is very important in the estate planning process. After all, you don’t want to create in-fighting between family members.

In addition, you should ensure that your business continues to provide you with a source of income even after you retire.

Furthermore, the value of your business should be at least maintained and hopefully increase during and after the succession process. The big question is: “Will your children be good stewards for your business, or will they cause the value of your business to plummet?”

Finally, one of the most important objectives of estate planning, per Madan Accountant Mississauga, is to minimize taxes upon your death. When you die, you are deemed to dispose of all of your assets at their fair market value. If you have substantial assets, and you haven’t planned properly, your family members may be forced to sell your assets, including the business, to fund the taxes upon your death.

As an Accountant in Mississauga , I can help you with the estate planning process.

Estate Freeze – by Accountant Mississauga

An estate freeze is a mechanism to pass on your business to family members now, with the objective of minimizing taxes upon your death. The objectives of an estate freeze are as follows:

• Transfer ownership and the future growth of your business to the next generation tax-free, while keeping control in your hands;
• Reduce or eliminate the taxable gain on the eventual disposition of your business upon death;
• Secure a steady stream of income from your business so that you can truly enjoy your retirement years; and
• Take advantage of income splitting opportunities with your family members immediately.

At Madan Accountant Mississauga, we have performed many estate freezes for our clients.

Capital Gains Exemption – by Accountant Mississauga

When selling the shares of your corporation to a third party, you may be able to able to apply the capital gains exemption.

The capital gains exemption eliminates any tax on the first $750,000 of gain on the sale of your corporation’s shares.

To qualify for the capital gains exemption, you must meet three tests:

1. Your business is a Canadian Controlled Private Corporation (i.e. corporations that are owned by non residents of Canada do not qualify)
2. For 2 years prior to the sale, 50% of the fair market value of your business assets are used in an active business carried on primarily in Canada (active business assets are assets other than cash or investments)
3. At the time of sale, 90% of the fair market value of your business assets are used in an active business carried on primarily in Canada

You should speak with your Accountant Mississauga , to determine if your business is eligible for the capital gains exemption.

ABOUT THE AUTHOR

ALLAN MADAN

CPA, CA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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