Income Tax – Planning for Business Succession

Overview:

Unlike people, business can theoretically exist forever, and unlike plane tickets, businesses are transferable. This course is designed to assist experienced tax practitioners in planning for owner-manager / private company business succession. The course will walk through the various stages of a business life cycle, with a view to identifying opportunities, techniques and tax considerations associated to intra-family and arm’s length succession planning for private companies.

Business succession involving closely held private companies can range from an intra-family estate plan to an arm’s length sale of shares. This course will provide practical knowledge of the principal business succession considerations. The focus will be on income tax considerations, although key non-tax issues will also be identified.

This course provides knowledge and tools necessary to identify, plan and manage business succession considerations for owner-managers of private companies through various phases of a business life cycle. The content is practical, while covering the pertinent tax issues in some detail. This course will provide a working knowledge of the principal tax and non-tax considerations in formulating and implementing business succession plans, along with detailed written materials for reference.

Course Content:

Some of the key topics covered in the course pertaining to business succession and estate tax planning include the following issues:  

• General tax and non-tax considerations related to business succession and estate planning for owner/managers.
• The ‘Wealth Cycle’ of an owner/manager’s private enterprise
• Estate freeze techniques and common corporate tax-deferred rollovers
• Divisive reorganizations (related party and unrelated party butterflies)
• Arm’s length and non-arm’s length divestiture planning
• Capital gains exemption planning and ‘purification’ techniques
• Post-mortem planning techniques 

Learning Objectives:

By enrolling in this seminar, individuals and practitioners can enhance their knowledge of business succession income tax planning through the following outcomes: 

• Identify and categorize an owner manager’s stage in the ‘wealth cycle’ for succession planning purposes
• Identify and apply business succession alternatives, including the associated tax and non-tax considerations
• Implement various estate freezing techniques, including the internal vs. external estate freeze, wasting estate freeze and refreezing transactions
• Identify instances of post-mortem double-taxation and advise upon the techniques available to mitigate such instances
• Understand the principals that surround valuation, price adjustment clauses and attribution rules, as those concepts relate to estate freeze transactions and succession planning
• Identify opportunities to involve the use of family trusts, alter-ego trusts and joint-spousal trusts in estate planning
• Identify and avoid the potential traps and instances of double-taxation that could arise through intra-family transactions and succession plans
• Determine the tax implications associated to arm’s length sale of private company shares, including the capital gains exemption (with purification strategies) and capital gains deferral rules
• Identify and appreciate the potential application of the anti-surplus stripping rules in sections 84.1 and 55(2) of the Income Tax Act
• Implement related-party divisive reorganizations and gain a basic understanding of ‘butterfly’ reorganizations involving unrelated parties

Who Will Benefit: 

This course will be useful to accountants in public practice with clients who are owner-managers of private corporations, as well as in-house professionals of private enterprises, especially those facing succession issues.