WHAT IS A SECTION 85 ROLLOVER
Corporate tax planning to dispose of eligible capital property to a taxable Canadian corporate on a tax-free basis, by way of a tax deferral on the received share consideration.
Contact Neufeld Legal PC at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com
A section 85 rollover enables a taxpayer (the transferor) to dispose of “eligible property” to a taxable Canadian corporation (the transferee), so that most, if not all, of the tax consequences which usually arise on such a disposition are shifted to the transferee corporation from the transferor. The transferor is permitted to dispose of the property to the transferee corporation for an “agreed amount” which may be other than the fair market value of either such property or the consideration received for it. This “agreed amount”, which is subject to the limitations, generally becomes the proceeds of disposition of the property to the transferor and the cost to the transferee. It also establishes the cost of the consideration receivable by the transferor from the transferee in return for the property transferred to the transferee. Subsection 85(1) of the Income Tax Act will apply in any case where:
From a Canadian corporate tax planning perspective, section 85 rollovers are one of the most common and significant corporate tax planning strategies. If your corporation requires the implementation of a section 85 rollover, or is looking for other corporate tax planning strategies, contact our law firm for a confidential initial consultation at Chris@NeufeldLegal.com or 403-400-4092 / 905-616-8864. |