Corporate Restructuring & Reorganizations
Optimize your corporate structure for tax efficiency, asset protection, and succession. We execute complex Section 85 rollovers, estate freezes, and amalgamations to preserve your wealth.
Why Restructure Your Corporation?
As your business grows, the simple corporate structure you started with might actually start working against you. It could leave your hard-earned profits exposed to lawsuits, block you from claiming massive tax exemptions when you sell, or trigger a huge tax bill for your family if something happens to you.
Corporate restructuring is just a fancy term for legally rearranging how your company is owned and set up. At Teixeira Accounting, we handle the heavy lifting. We use the tax code to your advantage, moving assets and changing share structures without triggering a tax bill today, so you can protect your wealth for tomorrow.
Section 85 Rollovers: Tax-Deferred Transfers
Normally, if you transfer an asset (like real estate, a stock portfolio, or an entire sole proprietorship) to a corporation, the CRA deems you to have sold it at Fair Market Value (FMV). This triggers immediate capital gains tax, even though you still effectively own the asset through the corporation.
A Section 85 Rollover allows you to transfer eligible property to a Canadian corporation on a tax-deferred basis. Instead of triggering tax today, the corporation assumes your original cost base, and you take back shares in the corporation as payment.
Common Section 85 Scenarios:
- Incorporating a Successful ProprietorshipTransferring goodwill, equipment, and inventory into a new corporation without triggering personal tax on the accumulated value.
- Moving Assets to a Holding CompanyTransferring real estate or excess cash out of an operating company (Opco) into a holding company (Holdco) to protect it from creditors.
The Mechanics of Section 85
1. Elected Amount
We carefully choose an "elected amount" (usually the original cost of the asset) to file with the CRA, ensuring no capital gain is realized.
2. Consideration Received
You must receive shares of the corporation in return. You can also receive "boot" (non-share consideration like a promissory note) up to the elected amount.
3. Filing Deadline
Form T2057 must be filed by the earlier of the tax return due dates for the transferor or transferee. Late filings incur significant penalties.
Section 85 Rollover Estimator
See how much personal tax you can defer when transferring appreciated assets (real estate, stocks, business goodwill) into a corporation.
Tax Triggered Without Planning
* Without a Section 85 election, transferring an asset to a corporation triggers this tax immediately. With proper planning, you defer this entire amount.
This tool is for general information only and does not replace professional tax or accounting advice.
Estate Freezes (Section 86)
Without planning, the CRA deems you to have sold all your shares at Fair Market Value on the day you die, resulting in a massive capital gains tax bill that could force your heirs to liquidate the business.
How an Estate Freeze Works
- Valuation: We determine the current Fair Market Value (FMV) of your company.
- Share Exchange: You exchange your current common shares (which grow in value) for new fixed-value preferred shares equal to today's FMV. Your tax liability is now "frozen."
- New Growth: New common shares are issued to your children, successors, or a Family Trust for a nominal amount (e.g., $100).
- Future Value: All future growth of the company accrues to the new common shareholders, bypassing your estate and avoiding tax on your death.
Benefits of Freezing
Tax Certainty
You know exactly what your tax liability will be upon death, allowing you to fund it efficiently with life insurance.
Income Splitting
If structured with a Family Trust, you can potentially sprinkle dividends to adult children in lower tax brackets (subject to TOSI rules).
Multiplying the LCGE
By bringing in family members as shareholders, you can multiply the $1M+ Lifetime Capital Gains Exemption when the business is eventually sold.
Purification & The LCGE
The Lifetime Capital Gains Exemption (LCGE) allows you to sell shares of a Qualified Small Business Corporation (QSBC) and pay zero tax on over $1,250,000 in capital gains (as of 2025 limits).
However, to qualify, your corporation must pass strict asset tests. Specifically, at the time of sale, 90% of the fair market value of the company's assets must be used in an active business in Canada.
If your operating company holds excess cash, passive investment portfolios, or unrelated real estate, it will fail this test. We perform a "purification reorganization" to strip these passive assets out of the operating company on a tax-free basis prior to a sale.
The 24-Month Rule
The LCGE rules also state that throughout the 24 months preceding the sale, more than 50% of the corporation's assets must have been used in an active business.
Critical Timing
You cannot wait until you have a buyer to purify your corporation. If you fail the 24-month 50% test, you lose the exemption entirely. Purification must be a proactive strategy.
Amalgamations & Wind-Ups
Simplifying corporate structures to reduce compliance costs and utilize tax losses.
Amalgamations (Section 87)
When two or more Canadian corporations merge to form a single new corporation, Section 87 allows this to happen on a tax-deferred rollover basis. The new entity inherits the tax attributes (like undepreciated capital cost and non-capital losses) of the predecessor corporations.
This is commonly used after an acquisition to merge a target company with a purchasing holding company, or to simplify a complex group of related companies to save on accounting and filing fees.
Wind-Ups (Section 88)
Section 88(1) governs the tax-deferred wind-up of a subsidiary corporation into its parent corporation (assuming the parent owns at least 90% of the shares). The subsidiary's assets roll up to the parent at their tax cost.
A key advantage of a Section 88 wind-up over an amalgamation is the potential to "bump" the tax cost of certain non-depreciable capital properties (like land or shares of another company) held by the subsidiary.
Why Choose Teixeira Accounting?
At Teixeira Accounting Firm Inc., we don't just record history; we write your financial future. Most accounting firms are reactive—they wait for you to bring them problems. We are proactive architects of your wealth and business growth.
Whether you're a scaling enterprise or a high-net-worth individual, we provide the strategic oversight, tax optimization, and bulletproof compliance you need to operate with absolute confidence.
The Teixeira Advantage
Proactive Tax Strategy
We don't just file your taxes; we actively look for ways to reduce your tax burden year-round.
Bulletproof Compliance
Our rigorous quality control ensures your filings are accurate, minimizing audit risk.
Dedicated Advisory
You get a dedicated partner who understands your business deeply, not just a once-a-year tax preparer.
Restructuring FAQs
Ready to Optimize Your Corporate Structure?
Secure your wealth, protect your assets, and minimize your tax burden with advanced corporate restructuring.