Double taxation erodes Canadian estates when private company shares trigger capital gains at death followed by dividend taxes on distributions. This guide explains the problem with real examples and outlines CRA-approved solutions like pipeline plans—transferring shares to a NewCo for promissory note repayment—and expanded loss carryback rules allowing offsets up to three years post-death.
In this case study, we outline the potential implications and options for Numbered Co. 1, which is an incorporated Ontario company and selling real property in Ontario, with unconfirmed information if the principal of the company is a resident of Ontario or a non-resident. This may have tax implications which may result in the purchaser requesting a holdback of the sale proceeds.
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