Tax Planning Services for Business Owners and Incorporated Professionals
Canadian Domestic Tax
Adian Professional Corporation CPA provides Canadian domestic tax planning services for incorporated business owners, CCPCs, shareholders, and their families throughout Mississauga and the Greater Toronto Area. Our tax planning practice focuses on structuring, succession, and estate-level planning for privately-held Canadian businesses — helping owners reduce tax, protect assets, and transition wealth efficiently within the Canadian tax framework.
Tax planning at this level is distinct from tax preparation. Where tax preparation is about accurately reporting what happened, tax planning is about structuring transactions and ownership before they happen — with the specific goal of reducing the total tax paid by the business, its shareholders, and their estates over time.
Important — Scope of Our Tax Planning Services
Adian Professional Corporation provides Canadian domestic tax planning only.
We do not advise on international tax matters. If your situation involves any of the following, we are not the right firm and will tell you so at the outset:
- Foreign income, foreign assets, or foreign bank accounts
- US tax obligations (Form 1040, FBAR, FATCA, Form 5471, Form 8938)
- Non-resident withholding tax under Part XIII of the Income Tax Act
- Treaty-based positions or cross-border transactions
- Controlled Foreign Affiliate (CFA) rules or Foreign Accrual Property Income (FAPI)
- Departure tax planning or emigration from Canada
- Immigration to Canada with foreign asset holdings
If any of the above apply to your situation, we will refer you to a firm that specializes in Canadian cross-border and international tax. We do not take on engagements outside our scope.
Our Tax Planning Disciplines
We provide four core tax planning disciplines, each described in detail below. All services are focused exclusively on Canadian domestic tax under the Income Tax Act (Canada) and the Ontario Taxation Act.
| Service Area | Who It Is For |
|---|---|
| Corporate Reorganizations | Business owners restructuring corporate ownership, adding a holdco, freezing an estate, or preparing for a sale or succession |
| Lifetime Capital Gains Exemption (LCGE) Planning | CCPC owners with qualifying small business corporation shares who want to shelter capital gains on a future sale |
| Post-Mortem Tax Planning | Executors and beneficiaries of estates holding private company shares, rental properties, or other assets subject to deemed disposition on death |
| Trust and Estate Plannings | Business owners using family trusts for income splitting, succession, or asset protection; estate planning for CCPC shareholders |
1. Corporate Reorganizations
A corporate reorganization is any planned restructuring of the ownership, share structure, or corporate architecture of a private company that is designed to achieve a specific tax or business objective. Reorganizations are not one-size-fits-all — the right structure depends on your specific circumstances, ownership mix, future plans, and the relevant provisions of the Income Tax Act.
At Adian Professional Corporation, we plan and implement corporate reorganizations for CCPC owners in Ontario. Every reorganization we undertake is grounded in the relevant sections of the Act and documented with a clear written plan before any transactions are executed.
Common Corporate Reorganization Scenarios We Handle
| Reorganization Type | What It Involves and Why It Is Done |
|---|---|
| Holding Company Introduction (Holdco) | Inserting a holding company above an operating company using a Section 85 rollover. The holdco receives dividends from the opco on a tax-free intercorporate basis (Section 112 deduction), and accumulates capital outside the reach of business creditors. This is one of the most common structures for CCPC owners in Ontario. |
| Section 85 Rollover — Property Transfer to a Corporation | Transferring eligible property (shares, real estate, business assets) to a corporation at an elected amount to defer or eliminate the capital gain that would otherwise arise on the transfer. Requires a joint election on Form T2057 filed with CRA. |
| Section 86 Share Exchange | Restructuring the share capital of an existing corporation — typically to introduce preferred shares, create a freeze structure, or separate voting from economic value. Used in estate freezes and succession planning. |
| Estate Freeze | Restructuring the share capital of an existing corporation — typically to introduce preferred shares, create a freeze structure, or separate voting from economic value. Used in estate freezes and succession planning. |
| Butterfly Reorganization (Section 55) | Splitting a corporation into two or more separate entities by distributing assets to shareholders on a tax-free basis under Section 55(3). Used when multiple shareholders want to separate their interests in a corporation — including on business divorces or pre-sale restructuring. |
| Capital Dividend Account (CDA) Planning | Declaring a capital dividend to distribute the CDA balance to shareholders tax-free prior to a sale or restructuring event. The CDA balance arises from capital gains realized by the corporation and life insurance proceeds received. |
| CCPC Purification for LCGE Qualification | Restructuring a corporation's assets to ensure it qualifies as a Small Business Corporation (SBC) prior to a share sale, in order to preserve the shareholders' eligibility for the Lifetime Capital Gains Exemption. |
What a Corporate Reorganization Engagement Looks Like
We do not execute reorganizations without a written plan. Every engagement follows this structure:
| Phase | What We Do |
|---|---|
| 1. Diagnostic Review | Review current corporate structure, share register, ownership, and existing agreements. Identify the objective and constraints. |
| 2. Structure Analysis | Prepare a written analysis of the proposed reorganization — applicable ITA provisions, tax consequences, elections required, and timing considerations. |
| 3. Engagement with Counsel | For reorganizations involving share issuances, amended articles, or new legal entities, we work alongside your corporate lawyer. We provide the tax plan; counsel implements the legal documentation. |
| 4. CRA Elections and Filings | Where required, we prepare and file CRA elections (T2057, T2058, and capital dividend elections on Form T2054 — Election in Respect of a Capital Dividend Under Subsection 83(2)) on a timely basis. Where applicable, we also file Schedule 89 to request CRA's verification of the CDA balance before the election is made. Late elections can be costly. |
| 5. Updated T2 Compliance | Post-reorganization, we update or prepare the T2 corporate returns to reflect the new structure, including Schedule 50 (shareholder information) and any required disclosure. |
2. Lifetime Capital Gains Exemption (LCGE) Planning
The Lifetime Capital Gains Exemption is one of the most valuable tax provisions available to Canadian private business owners. For 2025, the LCGE shelters up to $1,250,000 of capital gains on the sale of qualifying shares of a Small Business Corporation — completely tax-free in the hands of the shareholder. For a business owner in the top Ontario marginal bracket, this exemption can eliminate approximately $330,000 to $335,000 in personal tax on a qualifying share sale.
Legislative Status — $1,250,000 LCGE Limit
The $1,250,000 LCGE limit reflects the federal government’s announced policy position,
effective June 25, 2024. Formal legislation enacting this increase had not yet been passed
into law at the time of writing. The government has confirmed its intention to legislate
the increase. We recommend confirming the currently enacted LCGE limit with your advisor
before relying on this figure for planning purposes.
Additionally, the proposed Canadian Entrepreneurs’ Incentive (CEI) — which may reduce the
capital gains inclusion rate to one-third on up to $2,000,000 of eligible gains beyond the
LCGE for qualifying entrepreneurs — was announced as proceeding effective 2025, with the
maximum increasing by $400,000 per year to reach $2,000,000 by 2029. Its status following
the cancellation of the inclusion rate increase remains uncertain. Ask us about the CEI if
you are planning a qualifying business sale — it may provide significant additional relief
The exemption does not apply automatically. The corporation and the shares must meet specific tests under the Income Tax Act, and meeting those tests requires advance planning — often 24 months or more before a share sale. We work with CCPC owners to ensure their shares qualify well before a sale event is on the horizon.
LCGE Eligibility — The Three Tests
To qualify for the LCGE on a share sale, the shares must meet all three of the following tests at the time of the sale:
| Test | Requirement | Planning Implication |
|---|---|---|
| SBC Test (at time of sale) | At least 90% of the corporation's assets (by FMV) must be used principally in an active business carried on primarily in Canada. | Investment assets (excess cash, GICs, passive investments) held inside the corporation can disqualify the shares. Asset stripping or paying down passive holdings is often required in advance. |
| 24-Month Holding Period Tests | The shares must have been owned continuously by the selling shareholder (or a related party) for at least 24 months prior to sale. | Shares issued as part of a reorganization or estate freeze must be held for 24 months before the exemption applies to those specific shares. |
| 50% Asset Test (24-Month Test) | Throughout the 24 months prior to sale, more than 50% of the fair market value of the corporation's assets must have been used in an active business carried on primarily in Canada. | This is a historical test — it captures corporations that recently converted passive assets to active. Requires ongoing monitoring, not just a pre-sale cleanup. |
LCGE Planning Strategies We Implement
- Purification planning — restructuring the corporation’s asset mix to satisfy the 90% SBC test and 50% 24-month test, including intercorporate dividends to strip excess cash to a holdco
- Capital gains crystallization — voluntarily triggering a capital gain on CCPC shares to use available LCGE room before a rate change, share value increase, or death
- Multiplication of the LCGE through a family trust — where a discretionary family trust holds common shares of the opco and sells those shares, the capital gain can be allocated to multiple adult beneficiaries, each using their own $1,250,000 LCGE exemption
- Section 110.6 — filing elections and confirming the adjusted cost base and qualifying conditions prior to sale
- CDA coordination — capital gains arising from the share sale that are sheltered by the LCGE do not add to the CDA; we ensure CDA tracking is accurate throughout
- Pre-sale reorganization to separate qualifying and non-qualifying assets prior to a share sale, preserving LCGE eligibility on the qualifying portion
Important: TOSI and Income Splitting Restrictions
The Tax on Split Income (TOSI) rules under Section 120.4 of the ITA significantly restrict the ability to split income — including capital gains — with adult family members who are not actively engaged in the business. LCGE multiplication through a family trust is not available in all circumstances and requires a detailed analysis of TOSI applicability before implementation. We will not implement a structure that does not withstand scrutiny under the current TOSI rules.
3. Post-Mortem Tax Planning
Post-mortem tax planning addresses one of the most significant and often overlooked tax events in a business owner’s lifetime: the deemed disposition of assets on death. Under Section 70(5) of the Income Tax Act, a taxpayer is deemed to have disposed of all capital property immediately before death at fair market value — triggering a capital gain (or loss) on the terminal T1 return.
For an estate that holds shares of a private corporation, this deemed disposition can create a very large capital gain on the terminal return — and simultaneously, the same corporate assets may ultimately flow to the beneficiaries subject to a second layer of tax. Without post-mortem planning, the estate can face double taxation on the same economic gain.
The Double Tax Problem — How It Arises
| Stage | Tax Event Without Planning |
|---|---|
| Death of the shareholder | Deemed disposition of private company shares at FMV under s.70(5) — capital gain reported on terminal T1 return. Tax payable at approximately 26.76% (Ontario, 2025 capital gains inclusion rate). |
| Distribution of assets from the corporation to the estate | Dividends paid by the corporation to wind down or distribute the same assets that gave rise to the capital gain on death. Dividends are taxed again at the personal level — no credit for the capital gains tax already paid on the terminal return. |
| Net result | The same economic gain is taxed once as a capital gain on the terminal return and again as a dividend on distribution. Combined effective tax rate on the same gain can approach 60% or more without planning. |
Post-Mortem Planning Strategies
There are several mechanisms available under the Income Tax Act to eliminate or reduce double taxation on death. The appropriate strategy depends on the nature and value of the assets, the structure of the estate, and the relationship between the executor and the beneficiaries
| Strategy | How It Works |
|---|---|
| Pipeline Planningr | The estate transfers the private company shares to a new corporation (Newco) using a Section 85 rollover at the ACB of the shares in the hands of the estate (i.e., the stepped-up FMV at death). Newco then winds up the operating company and distributes its assets as a return of paid-up capital — not as a dividend — eliminating the second layer of tax. Timing and legal implementation are critical. |
| Section 164(6) Loss Carryback | If the estate disposes of private company shares at a loss in the first taxation year after death, that loss can be carried back to the terminal T1 return under Section 164(6) — offsetting the capital gain reported on death. This is a simpler strategy but requires the estate to realize the loss within the first year. |
| Spousal Rollover (Section 70(6) | Where assets pass to a surviving spouse or common-law partner, the deemed disposition is deferred — assets roll to the spouse at ACB rather than FMV. This defers the capital gain until the surviving spouse disposes of the assets or dies. Useful for deferral but does not eliminate the eventual gain. |
| Life Insurance Integration | Corporate-owned life insurance can fund the tax liability on death and add to the Capital Dividend Account — allowing a tax-free capital dividend to the estate. This does not eliminate the capital gain but provides liquidity to pay the tax without forcing a fire sale of assets. |
| RRSP/RRIF Designation Planning | RRSP and RRIF balances are fully included in income on death (unless transferred to a qualifying spouse, minor child, or financially dependent child). Proper beneficiary designations and spousal RRSP strategies are part of every post-mortem engagement. |
When to Engage Us for Post-Mortem Planning
Post-mortem planning works best when it is done before it is needed — ideally as part of an estate freeze or succession plan put in place while the business owner is alive. However, if a death has already occurred, there are still strategies available, and timing is critical:
- Pipeline planning must be implemented within the estate’s first taxation year to be most effective
- Section 164(6) loss carryback elections have specific deadlines tied to the estate’s filing obligations
- Corporate wind-up under Section 88 has specific timing requirements
- CDA elections must be filed before dividends are paid — an after-the-fact CDA election is not possible
If you are an executor of an estate that holds private company shares, contact us immediately. Post-mortem planning opportunities are time-sensitive. We work with estates across Ontario and coordinate with estate lawyers and trust companies on complex engagements.
4. Trust and Estate Planning
Trust and estate planning for CCPC owners involves structuring both the current tax position of the business and the long-term transfer of wealth to the next generation. This is technically grounded tax work under the Income Tax Act, the Succession Law Reform Act (Ontario), and the relevant trust provisions of the ITA.
Family Trusts in CCPC Structures
A discretionary family trust is one of the most commonly used planning vehicles for CCPC owners in Canada. When structured properly, a family trust holding common shares of the operating company can provide income splitting, LCGE multiplication, estate equalization, and succession flexibility — all within a single structure.
We advise on the use of family trusts in the following contexts:
| Trust Planning Objective | How We Approach It |
|---|---|
| Income splitting with adult beneficiaries | Trust income is allocated to beneficiaries (adult children, spouse) at their marginal rates — subject to TOSI restrictions for adult beneficiaries who are not actively engaged in the business. We analyze TOSI applicability before recommending any income splitting arrangement. |
| LCGE multiplication on share sale | Where a family trust holds shares of a qualifying SBC, capital gains on a share sale can be allocated to multiple adult beneficiaries — each sheltering up to $1,250,000 with their individual LCGE. Subject to TOSI analysis and 24-month holding period. |
| 21-year deemed disposition planning | Inter vivos trusts are deemed to dispose of all capital property every 21 years at FMV — a potential capital gains event that must be managed through rollouts to beneficiaries or trust wind-up before year 21. We track this for every family trust we advise on. |
| Estate equalization | Where a business owner has multiple children, some involved in the business and some not, a trust can be used to equalize the estate — allocating business value to the active children and other assets to non-active children — without triggering immediate tax. |
| Asset protection | Trust assets are generally protected from the personal creditors of beneficiaries — useful in professional practice contexts where malpractice or personal liability is a risk. |
Testamentary Trusts and Estate Planning
Testamentary trusts — trusts created under a will — are an important planning tool for estates holding private company shares. Since 2016, only Graduated Rate Estates (GREs) receive graduated tax rates. We advise on:
- Graduated Rate Estate (GRE) eligibility and the 36-month window in which the estate qualifies for graduated rates
- Qualified Disability Trusts (QDTs) for estates with beneficiaries eligible for the disability tax credit
- Spousal trusts under Section 70(6) — rolling assets to a spousal trust on death to defer capital gains while controlling the ultimate distribution of assets
- Will planning for CCPC shareholders — coordinating the will with the share structure, shareholder agreement, and buy-sell provisions to avoid conflicts between the legal and tax objectives
- Life interest trusts and income rights — structuring trust income entitlements to balance the competing interests of life tenants and capital beneficiaries
Charitable Giving and Donation Planning
For business owners with philanthropic objectives, there are tax-efficient strategies for charitable donations as part of an estate plan:
- Donation of publicly listed securities directly to a registered charity — eliminates the capital gain on the donated securities and generates a donation tax credit at FMV
- Charitable bequests in a will — qualifying donations made in the year of death or carried back to the terminal T1 return
- Private foundation and Donor-Advised Fund (DAF) planning for larger gifts
- Life insurance donation strategies — naming a charity as beneficiary of a corporate-owned life insurance policy
Note: We do not advise on international charitable giving or offshore foundation structures. All charitable planning is within the Canadian domestic tax framework.
Frequently Asked Questions
Tax preparation is the process of accurately reporting income, deductions, and credits for a completed fiscal year — your T2 and T1 returns. Tax planning is the process of structuring transactions, ownership, and compensation before they occur, with the goal of legally reducing total tax paid over time. The two services are complementary: effective tax planning informs better tax preparation, and tax preparation findings often reveal planning opportunities. We provide both.
No. We do not advise on US tax, cross-border tax, or any international tax matters. This includes US tax returns (Form 1040), FBAR filings, FATCA reporting, non-resident withholding tax, and treaty-based planning. If your situation has a US or international component, we will tell you clearly at the outset and refer you to a firm qualified to handle cross-border tax. Our practice is 100% Canadian domestic tax under the Income Tax Act (Canada).
For LCGE planning and corporate reorganizations, 24 to 36 months before an anticipated sale or succession event is the minimum advisable lead time. Many of the structures that reduce tax on a business sale — share purification, estate freezes, trust structures — require assets or shares to be held for 24 months before the relevant tests apply. Planning initiated the year of a sale is almost always too late to implement the most valuable strategies. We recommend a planning review any time there is a material change in business value, ownership, or the owner's personal circumstances.
No — and we would not attempt to. Corporate reorganizations involving share issuances, amended articles, new legal entities, or trust deeds require legal documentation prepared by a corporate lawyer. Our role is to design the tax plan, prepare the CRA elections, and coordinate with counsel. We do not draft legal documents. We work alongside your existing lawyer or can refer you to corporate counsel in the GTA if you do not have one.
TOSI — Tax on Split Income — is a set of rules under Section 120.4 of the Income Tax Act that causes certain types of income received by a Canadian resident individual from a private corporation (or trust holding shares of a private corporation) to be taxed at the highest marginal rate, regardless of the recipient's own income level. TOSI significantly limits the ability to split dividends and capital gains with family members who are not actively engaged in the business. We analyze TOSI applicability before recommending any income splitting or trust structure — we do not implement arrangements that result in TOSI exposure for our clients.
Contact us as soon as possible — post-mortem planning is time-sensitive. The pipeline, CDA elections, and Section 164(6) loss carryback strategies all have deadlines tied to the estate's filing timeline. Do not distribute assets from the corporation to the estate until we have reviewed the options. Distributing assets as dividends before implementing a pipeline or other strategy eliminates the most effective double-tax mitigation tools.
Our Scope — Canadian Domestic Tax Only
Adian Professional Corporation provides Canadian domestic tax planning services only.
We serve business owners and incorporated professionals who are:
- Canadian residents for tax purposes
- Operating businesses incorporated in Canada
- Without foreign income, foreign assets, or cross-border tax obligations
We do not accept engagements involving US tax, international tax, non-resident issues,
foreign affiliate rules, or any cross-border planning.
If you are unsure whether your situation is within our scope, call us at 647-715-2156.
We will tell you directly whether we can help — or refer you to the right firm if we cannot.
Ready to Start a Tax Planning Conversation?
Contact Adian Professional Corporation CPA to discuss your tax planning objectives. We serve incorporated business owners, CCPCs, and professionals in Mississauga, Brampton, Oakville, Burlington, and the Greater Toronto Area.
Tax planning is most effective when it starts early. Whether you are planning a business sale, restructuring your corporate ownership, concerned about the tax implications of your estate, or simply want to ensure your compensation structure is optimized — the right time to have the conversation is now.
All tax planning engagements begin with a scoping call — no charge, no obligation.