There are many reasons companies may need to be reorganized:
- to amalgamate or combine companies in order to use the profits of one company against the losses of another
- to create holding companies for creditor-proofing reasons
- to divide the assets of a corporation among the shareholders (referred to as a butterfly reorganization)
- to incorporate a business, so that it may be carried on in corporate form
- to transfer a business from a corporation to a partnership to deduct losses, take in a partner, or eliminate capital tax
- to carry out an estate freeze in the most effective manner
- to simplify a group of companies or eliminate inactive companies that are no longer useful
- to change the nature of a corporation’s income (from investment income to active income or vice versa)
We sometimes see situations where businesses are set up with a certain structure to take advantage of particular circumstances that were relevant at the time they were set up, but situations change over time.
Therefore, it is sometimes the case that the favorable conditions existing at the time your corporate structure was put in place are no longer there, and you might end up with a somewhat cumbersome or inefficient structure in today’s business climate, particularly from a tax point of view.
We work with companies in this situation to help them reorganize and restructure so that they can reap the rewards of the existing tax regulations – often resulting in tens of thousands of dollars of potential tax savings every year into the future.
In many situations, we may recommend a corporate reorganization, whether for corporate tax planning, creditor proofing or other organization purposes.
We can also assist you in the transfer of assets on a tax-deferred basis from one entity to another, or from one corporation to another. Alternatively we could recommend amalgamating two corporations or winding up one into the other for tax planning purposes or to rationalize a corporate structure.
We will investigate the options thoroughly and advise you of the best plan to meet with your objectives. We can advise on whether a corporate reorganization is required, the benefits of such a reorganization, and the disadvantages, if any.
We can develop a plan to implement the corporate reorganization, and work with legal counsel to execute the plan. We will also prepare the required tax-reporting forms, and produce a reporting letter summarizing the reorganization.