Corporate restructures are not always simple and the tax implications may be brutal. Although some restructure transactions give rise to a disposition and would likely result in a liability for normal tax they do not always result in gains that truly affect a person's liability to contribute to revenue.
However, the Income Tax Act (the ''Act'') provide relief mechanisms (i.e. Corporate Rules) for companies implementing restructure transactions which permit income or gains attracted by such transaction to be deferred for a period of time. Generally described as 'rollover' or 'holdover' reliefs, the Corporate Rules are designed to remove the tax obstacles, if any.
Many clients and practitioners are unaware of these provisions and they realise the tax implication only when it is too late to be mitigated. The Corporate Rules are interwoven with anti-tax avoidance rules, which add considerable complexity to the rollover provisions. For further detail and information please contact our offices to discuss before implementation. The incorrect application of the rollover provisions may result in severe detriment to your company.