How we help
- Estate freeze structuring with succession in mind
- Bill C-208 intergenerational-transfer planning (ITA s. 84.1)
- Multiplied LCGE planning across family members
- Share-class engineering to align voting and economic control
- Section 85 rollover of pre-transfer dividends to next-gen holdco
- Post-mortem pipeline planning (bump strategy)
- Earn-out and vendor-takeback financing analysis
The succession question
Transferring a family business to children, grandchildren, or other family members involves the same tax mechanics as a third-party sale — but with the added consideration that the buyer and seller share an economic interest. The good news is that there are tax tools designed specifically for family transfers; the bad news is that they require multi-year setup and don't work as well when implemented in the year of transfer.
The two big tools
Estate freeze. Freezing the value of the corporation at today's level, while issuing growth shares to the next generation or to a family trust holding the growth, transfers all future appreciation to the next generation outside the founder's estate. Combined with multi-beneficiary trust structures, the freeze creates the platform for both annual income splitting and an eventual multi-LCGE-claim sale.
Bill C-208 intergenerational transfers (ITA s. 84.1). Section 84.1 historically penalized intergenerational share transfers by recharacterizing the sale proceeds as a dividend instead of a capital gain — eliminating the seller's access to the LCGE. Bill C-208 (in force 2021) and the 2023 federal amendments created a structured path for genuine family transfers, where the seller receives capital-gains treatment provided specified conditions are met. The conditions are real (active business carried on for 24 months, control transfer within 36 months, no return-of-control mechanics) and need to be planned for.
The typical 5–7 year planning horizon
A common succession plan looks like this:
- Year -7 to -5: Estate freeze. Founder's common shares converted to preferred; family trust issues growth shares. Future growth is now outside the founder's estate.
- Year -5 to -2: Purification. Excess investments are moved out of the opco (to a separate holdco) so the opco maintains QSBC status. The 24-month QSBC test starts running.
- Year -2 to 0: Trust restructuring to ensure the LCGE multiplier is in place. Trustees may "freeze" the trust's preferred shares so the eventual sale gain is allocated to the right mix of beneficiaries.
- Year 0: Transfer. The intergenerational transfer happens — typically through a holdco purchase of the founder's preferred shares, using corporate cash and/or vendor financing. Section 84.1 / Bill C-208 conditions are met. Founder claims LCGE on the preferred-share gain.
- Years 0 to +5: Buyer's holdco repays vendor financing through after-tax dividends from the now-purchased opco. Founder, now retired, receives capital-gains-rate payments instead of dividend-rate payments.
Bill C-208's conditions
The 2023 amendments to Section 84.1 split family transfers into two streams: immediate transfers and gradual transfers. The conditions for each stream include:
- The transferred shares must qualify as QSBC shares at the time of sale.
- The purchaser must be a corporation controlled by one or more children (or grandchildren) of the transferor.
- The transferee corporation must take a meaningful operational role in the business (the transferor must reduce control within a specified window).
- The transferor must report the disposition on a specified form (T2057 + the new prescribed declaration).
Multi-LCGE multiplication
If the founder owns the corporation directly, only their single LCGE shelters the eventual gain. If a family trust holds growth shares and allocates the eventual sale gain across multiple adult beneficiaries (each claiming their own LCGE), the same business can absorb $4M-$5M of gain tax-sheltered instead of $1M. Multiplication is especially valuable on transfers to multiple children or to a holdco owned by a child and that child's spouse.
Post-mortem planning
If the founder dies before the planned transfer, post-mortem planning becomes critical. The estate has 36 months to use the "pipeline" strategy (Section 84(2) shareholder wind-up, taking out the corporate cash at capital-gains rates instead of dividend rates) or the "bump" strategy (Section 88(1) ACB step-up on inherited shares of an amalgamated corporation). Both require careful coordination with the will's executor and the corporate accountant.
How we work the file
Succession files run as multi-year engagements. We do the planning memo, coordinate the freeze and trust settlement, monitor QSBC purification, and then handle the eventual transfer transaction. Fees are fixed for each phase. The total cost over a 5-7 year horizon is typically a fraction of the tax saved at transfer.
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.