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Tax planning for founders (Webinar)

May 19, 2021

Waiting until the eleventh hour to prepare a tax plan for your company can present a host of problems. Planning at the earliest stage possible will not only save you money, but will optimize your tax benefits. This was the central theme that emerged from the “Tax planning for founders” webinar, hosted by Osler’s Chad Bayne, co-chair and partner, Emerging and High Growth Companies and Mark Brender, partner, Taxation, along with guests Matt Golden, founder of Golden Ventures, and Darryl Irwin , Tax Partner, PwC Canada.

Establishing a family trust can be a good starting point. Spouses and children can be included in the trust. Each member is eligible for a lifetime capital gains tax exemption of $890,000. When multiplied for each member of the trust, this can add up to a few million dollars.

A family trust can be set up for each founder. The founder determines the settlor, trustees and beneficiaries. A good time to set up this trust is either during incorporation or early rounds of company fundraising.

When selling a company, a Capital Dividend Account (CDA) can be used to reduce capital gains on the sale. The CDA also can be used to redeem shares owned by the founders and other shareholders as part of a secondary transaction. Alternatively, the CDA may be purposed to make tax efficient payments to key management in lieu of bonuses.


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