How we help
- Asset-vs.-share deal analysis on both sides of the border
- Section 85 rollover and Section 351 exchange coordination
- Treaty Article IV residency for the post-closing surviving entity
- Branch profits tax (IRC s. 884) on US activities of Canadian acquirers
- Subpart F and GILTI exposure for Canadian targets of US acquirers
- Transfer pricing on post-closing intercompany flows
- Section 116 clearance for non-resident sellers of TCP
What's different about cross-border
The mechanics of a Canadian acquisition look superficially similar to a domestic one — letter of intent, due diligence, definitive agreement, closing. The substance is different at every stage when the deal crosses the Canada-US border. Tax treaties allocate primary taxing rights between the countries on specific income streams, and the treaty positions interact with both countries' integration regimes (Subpart F and GILTI in the US, the foreign-affiliate rules in Canada). Choices made at the structure stage define the after-tax outcome for years.
Asset vs. share — and the rollover question
In a US target acquired by a Canadian buyer, the asset-vs.-share trade-off has the usual contours: asset deals give the buyer a stepped-up basis and depreciation/amortization, but the seller pays double tax (entity-level + shareholder-level). A 338(h)(10) election can synthesize an asset purchase from a share transaction with a single-level US tax cost. The Canadian buyer's after-tax position depends on whether the acquired US business will distribute back to Canada (and on treaty Article X withholding rates).
In a Canadian target acquired by a US buyer, the Canadian side offers Section 85 rollover treatment for share-for-share consideration and Section 86 / 87 mechanics for reorganizations. The US-side characterization of a Section 85 rollover as a Section 351 exchange (or not) determines whether the US-resident shareholders defer their US tax on the share-swap component of the consideration.
Treaty residency of the surviving entity
Cross-border deals frequently produce entities that meet both Canadian and US residency tests under domestic law. Article IV of the Canada-US treaty tie-breaks dual-resident entities by reference to place of incorporation (for companies) and, if that's indeterminate, by mutual agreement of the two competent authorities. The treaty residency of the surviving entity determines which country has primary right to tax its worldwide profits, which can swing the deal economics by tens of millions on a large transaction.
Branch profits and Subpart F / GILTI
A Canadian acquirer of a US target that continues to operate through a US branch (not a US subsidiary) is exposed to US branch-profits tax under IRC section 884 — a second-level tax intended to mimic the dividend-withholding cost that would apply if the same profits had been earned through a US subsidiary and distributed to the Canadian parent. The branch profits tax can be reduced or eliminated under the treaty, but the position must be claimed.
A US acquirer of a Canadian target inherits a controlled foreign corporation. Annual Subpart F inclusions for passive and certain types of active income, GILTI inclusions on global intangible low-taxed income, and the Section 250 deduction interact in ways that materially change the US shareholder's annual tax bill compared to owning a US subsidiary.
Section 116 and post-closing
If the Canadian target's shares are taxable Canadian property (TCP) — which they usually are — Section 116 clearance is required for each non-resident seller. The clearance is a CRA-controlled bottleneck that frequently sets the outer limit of the deal closing date. We file in advance.
How we work the file
Deal-level engagements at Barrett Tax Law combine cross-border tax structuring with the existing Canadian M&A team. We work alongside US deal counsel (often locally-admitted to the US state where the target operates), provide the Canadian tax position, model the after-tax outcomes under each structure, draft the tax sections of the definitive agreement, and handle Section 116 clearances and CRA-side post-closing filings.
What to expect when you call us
Your first call is a free, no-obligation consultation with a tax lawyer. We will review the details of your situation, explain your options under the Income Tax Act and CRA administrative practice, and give you a clear, fixed-fee quote if you choose to retain us. Your consultation is confidential, and once we are retained, communications are protected by solicitor–client privilege.
If you retain us, we begin work within 24 hours of being retained.
Frequently asked questions
Is the consultation really free?
Yes. Most cases qualify for a free, no-obligation consultation with one of our tax lawyers. During the call we'll review your situation, explain your options, and give you a clear quote if you decide to retain us.
What does a tax lawyer do that an accountant does not?
A tax lawyer focuses on the legal side of tax — disputes, litigation, and the structuring of transactions in light of the law and anti-avoidance rules. That includes representing taxpayers in CRA audits and objections, appearing at the Tax Court of Canada, defending penalties and director or derivative liability, and designing reorganizations such as section 85 rollovers and estate freezes.
The most practical distinction is privilege. Communications with a lawyer are generally protected by solicitor-client privilege, while communications with an accountant generally are not and can be demanded by the CRA. Where the facts are sensitive or the matter could become contentious, that protection matters.
Lawyers and accountants often work together — the accountant on the numbers and filings, the lawyer on strategy, privilege, and the legal record. Barrett Tax Law regularly coordinates with a client's existing accountant.
Do you serve all of Canada?
Yes. Barrett Tax Law represents clients across Canada. We have offices and local phone lines in Toronto, Calgary, Edmonton, Fort McMurray, Ottawa, Vancouver, and Winnipeg, plus a national toll-free line at 1-877-882-9829.
Who is Barrett Tax Law and what areas does the firm handle?
Barrett Tax Law is a Canadian boutique tax law firm that represents individuals and businesses in their dealings with the Canada Revenue Agency. The firm's work spans CRA audits and disputes, voluntary disclosures, Tax Court of Canada litigation, collections matters, and corporate and estate tax planning.
The firm was founded in 2009 and has represented many thousands of clients across Canada. Its head office is in Concord, Ontario (Vaughan), and it serves clients nationwide. You can reach the firm toll-free at 1-877-882-9829 (1-877-8-TAXTAX).
Most matters qualify for a free, no-obligation consultation, and most are quoted on a fixed-fee basis once scope is understood, so the cost is known before work begins.
What does a tax lawyer do that an accountant cannot?
Accountants prepare returns and financial statements. Tax lawyers represent you when those returns are challenged, audited, or prosecuted — and our communications are protected by solicitor–client privilege, which accountant communications generally are not.
What should I do if I receive a letter from the CRA?
First, identify what the letter is and what it requires. A CRA letter may open an audit, ask for documents, propose adjustments (a proposal letter), confirm a reassessment, or start collection action — and each carries its own deadline and its own implications. Note any date by which a response is required.
Do not ignore it, and be careful about responding off the cuff. What you say and produce can shape your later objection and appeal position, and casual admissions can be difficult to undo. If the letter proposes adjustments or penalties, or if significant amounts are involved, get advice before responding.
A free consultation can help you understand the letter, the deadline, and the right next step. Acting early — while options are still open — is usually far better than waiting until a deadline is near.
Will the CRA criminally prosecute me?
Most CRA disputes are civil. Criminal prosecution is reserved for serious tax evasion or fraud, usually involving deliberate misrepresentation. If you have unreported income, a voluntary disclosure is one of the standard ways to reduce criminal-prosecution risk.
Is the first consultation really free?
Yes. Most matters qualify for a free, no-obligation consultation with an experienced tax lawyer. The consultation is a chance to describe your situation, get a clear sense of the options and likely path, and receive a fee structure in writing before you commit to anything.
You can reach the firm toll-free at 1-877-882-9829 (1-877-8-TAXTAX) to arrange a confidential consultation. The head office is in Concord, Ontario (Vaughan), and the firm serves clients across Canada.
Are my communications with a tax lawyer confidential?
Yes. Communications between you and your lawyer for the purpose of obtaining legal advice are generally protected by solicitor-client privilege, one of the most strongly protected confidences in Canadian law. In practical terms, the CRA generally cannot compel disclosure of privileged communications.
This is an important difference from working with an accountant or other non-lawyer representative, whose communications and working papers can generally be demanded by the CRA. Where the facts are sensitive — unreported income, offshore assets, or potential penalties — that protection can be significant.
Privilege has limits and can be waived inadvertently, so it should be handled with care. A consultation can explain how privilege applies to your particular situation.
How fast can you start on my case?
We typically begin work within 24 hours of being retained. For audit deadlines, Notices of Objection, and other time-sensitive matters, we move immediately.
What if I have unfiled tax returns from many years ago?
We routinely handle 5+ years of unfiled returns. Through the Voluntary Disclosures Program — applied for before the CRA contacts you — we can usually eliminate gross-negligence penalties and limit interest exposure.