We often see situations where businesses are structured in a certain way to take advantage of particular circumstances that were relevant at a particular time.
However situations change over time and often companies forget to readdress their corporate reorganizational structure to meet their current needs.
It is therefore sometimes the case that the favourable conditions existing at the time your corporate structure was put in place are no longer there, and you might end up with a somewhat cumbersome or inefficient structure in today’s business climate, particularly from a tax point of view.
We work with companies in situations like this to help them reorganize and restructure so that they can reap the rewards of the existing tax regulations – often resulting in tens of thousands of dollars of potential tax savings for years into the future.
In many situations we may recommend a corporate reorganization, whether for corporate tax planning, creditor proofing or other organization purposes.
We can also assist you in the transfer of assets on a tax-deferred basis from one entity to another, or from one corporation to another. Alternatively, we could recommend amalgamating two corporations or winding up one into the other for tax planning purposes or to rationalize a corporate structure.
We will investigate the options thoroughly and advise you of the best plan to meet with your objectives.
There are many reasons companies may need to reorganize:
- to amalgamate or combine companies in order to use the profits of one company against the losses of another
- to create holding companies for creditor-proofing reasons
- to divide the assets of a corporation among the shareholders (referred to as a butterfly reorganization)
- to incorporate a business, so that it may be carried on in a corporation
- to transfer a business from a corporation to a partnership to deduct losses, take in a partner, or eliminate capital tax
- to carry out an estate freeze in the most effective manner
- to simplify a group of companies or eliminate inactive companies that are no longer useful
- to change the nature of a corporation’s income (from investment income to active income or vice versa)
Our team will advise on whether a corporate reorganization is required, the benefits of such a reorganization, and the disadvantages, if any. We can develop a plan to implement the corporate reorganization, and work with legal counsel to execute the plan. We will also prepare the required tax-reporting forms, and produce a reporting letter summarizing the reorganization.
To find out if this type of situation applies to you, call us today at 905-528-0234, and speak with Joe Truscott.
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