Face the future with confidence – and tax and succession plans

Face the future with confidence – and tax and succession plans

5 Minute Read

Tips to update your tax and succession strategies now to take advantage of what could be a narrow window of opportunity.

National Leader, Succession Services

You’ve built up your real estate and construction business, navigated through the pandemic and a host of uncertainties, and are seeing the results of your efforts. Now’s the time to update your tax and succession strategies to ensure you continue to capitalize on opportunities.

Canadian tax rules are constantly changing, meaning your tax strategies should be updated on a regular basis to minimize liabilities, such as paying too much property tax, and account for changes to your business and personal environment. For example, evolving consumer and finance trends due to the pandemic already have changed the real estate landscape. And recent tax measures announced in the 2021 federal budget directly affect real estate and construction businesses.

Looking further out, a tax plan should include a well-thought-out exit strategy determined in collaboration with a trusted team of advisors. The strategy optimally is planned and implemented over several years to make sure all key features – from assets to employees – are in place for a successful exit, on your terms.

Weigh your options

Succession options for most businesses include family succession, management buyout, and sale to a third party. For those considering family succession, the recently announced Bill C-208 now allows qualifying business owners to transfer ownership to family members and claim capital gains exemption – a major tax-saving consideration previously unavailable to them. Contact your tax advisor soon for more information, as there could be a limited window in which you can apply.

Management buyouts and employee share option plans have become increasingly popular as they can create long-term business value and an exit strategy for the founder. Even selling to a third party benefits from proactive planning to attract the highest bidder.

Pitfalls to avoid

When starting your succession journey, it is important to have clear communication with all stakeholders and a clear understanding of the process. Try to avoid:

  • Assuming people are interested - or not
  • Eliminating management as a successor because they can’t afford it
  • Picking the wrong successors
  • Assuming fair is the same as equal
  • Starting too late and losing key people or tax advantages
  • Establishing a price without basis
  • Not having a Plan B
  • Not involving advisors in the process

Steps to a successful future

Spend the time to plan and clarify your needs, including your family, if appropriate, and the needs of the business to develop a tax and succession structure and implementation plan.

  • Have clear objectives
  • Optimize your tax and estate plan
  • Consider your options
  • Align your business plan to your retirement goal
  • Update your governance structure
  • Identify and motivate key employees
  • Prepare for the unexpected

Contact us

For more information, contact:

Melissa Aveiro, CPA, CA
Regional Lead Partner - Tax and Real Estate and Construction
[email protected]

Shane King, CPA, CA
National Leader, Succession Services
[email protected]


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