When is it more beneficial for business owners to sell its shares in the corporation rather than the corporation’s assets?
If your corporation qualifies for the Lifetime Capital Gains Exemption (LCGE), you will only have to pay tax on the difference between the sale price and the exemption limit.
Do all corporations qualify for the Lifetime Capital Gains Exemption?
Only small business corporations qualify for the Lifetime Capital Gains Exemption, where 90% or more of its assets were used in an active business in Canada.
What is “limited liability?”
By acquiring shares of a Corporation, a Purchaser is acquiring ownership of the Corporation, including, its underlying assets and liabilities (known and unknown). As such, a Vendor in a share sale enjoys limited liability upon closing (subject to indemnities provided).
