Seeking advice on acquiring Canadian company

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by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management
in Boston, MA, USA

1yr ago

Seeking advice on acquiring Canadian company

Hi all,

Our team is based in the US and currently looking to acquire a company in Ontario, Canada. Would love to connect with anyone who has done similar transactions for your advise on legal structure, any tax impact/benefit by setting up the NewCo in Canada or US. Also would love any recommendation on attorney but give the deal size is so small, we are probably looking to retain someone who's open to hourly work.

Thank you for the help in advance!

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reply by an intermediary 1yr ago
in Toronto, ON, Canada

I think an important thing to keep in mind is the lifetime capital gains exemptions for sellers of qualified Canadian businesses - and what the requirements are to remain onside of that. For small to medium businesses this will be a big consideration - it will give the founder the first 1.5M tax free (or $1.25M?) - and some will have structured their ownership with their spouse and possibly children to multiply that.

This saves them 33% in capital gains taxes for the total exemption - it only applies to share sales and has some other requirements.

reply by a searcher 1yr ago
from Ivey Business School at Western University in Toronto, ON, Canada

Thanks for the tag Luke. Not the best person to opine on cross-border legal & tax but sounds like the right people (ie Mario) have been tagged here to weigh in.