Articles

Marijuana Businesses in Canada

Cannabis Plant

On June 24, 2015, prompted by both the federal government’s pledge to legalize possession of marijuana for recreational purposes, and the growing number of marijuana-related businesses in the city, Vancouver became the first city in Canada to create by-laws regulating marijuana-related businesses. Marijuana businesses in Ontario have become more common but are currently unregulated at…

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Share Sale or Corporate Redemption?

Cherries on Branch

Frequently when restructuring a closely held private corporation shareholders must decide whether to transfer shares from one shareholder to another with a share purchase and sale or to have the corporation redeem (i.e. buy back) the shares from the shareholder, resulting in a reduction in the total number of issued and outstanding shares and increased…

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CRA Voluntary Disclosure Program

Cardinal in Early Spring

The Canada Revenue Agency’s Voluntary Disclosure Program promotes voluntary compliance with Canada’s tax laws by encouraging taxpayers to come forward and correct deficiencies in their tax filings on a penalty exempt basis. This paper provides an overview of the existing Voluntary Disclosure Program, analyses the programs current use and argues in favour of amendments to…

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The Due Diligence Defence

Chain Lock

What is due diligence and why is it important? “Due diligence” is a context-specific determination referring to the level of judgment, care, prudence, determination, and activity with which a person would reasonably be expected to act. In business dealings, establishing due diligence – that you, as either an officer or a director of the corporation…

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How to Set up a Co-operative

Muskoka Lake

A cooperative or “co-op” refers to an incorporated business organization owned by members sharing common needs or goals. Incorporation presents a number of advantages to its members, namely the co-op’s separate legal existence, limited liability for the members, and general agreement to basic principles on how the organization will operate.

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The Decline of the Successful Tax Shelter

Sunflower

This essay reviews the Income Tax Act (Canada) (the “Act”) tax shelter provisions and provides an overview of relevant issues to demonstrate that despite criticisms that the provisions and Canada Revenue Agency (“CRA”) enforcement are overreaching, it has been successful in prohibiting, preventing and reassessing participants in aggressive tax shelter programs. It argues that issues…

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Buying or Selling a Business? Read This

Daisies

There are two main ways to buy or sell an incorporated business: buying and selling its assets or buying and selling its shares. An asset purchase and sale consists of selling the corporation’s tangible (e.g. inventory and equipment) and intangible (e.g. goodwill and intellectual property) assets. Buyers often prefer asset sale transactions because business liabilities…

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How to Register a Charity

Wild Ferns

In common usage, the word ‘charity’ is often used to refer to any not-for-profit organization. However, legally, registered charities and non-registered not-for-profit organizations are treated differently for tax purposes in important ways. While not-for-profits are generally exempt from income tax, registered charities have broader tax exemptions including the ability to issue charitable tax receipts to…

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Income Tax General Anti-Avoidance Rule

Pasture

This paper provides an overview of the Canadian General Anti-Avoidance Rule (“GAAR”) including its history, legislative intent, implementation, resulting policy issues and judicial treatment. It argues that GAAR is vague, contrary to the doctrine of legal certainty and grants broad discretion to the government bodies tasked with its review and enforcement. While judicial treatment of…

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Shareholder Agreements: A Primer

Cabbage

What is a shareholder agreement? A shareholder agreement is an agreement between the shareholders of a corporation establishing the rights of the company’s shareholders as well as the management of the corporation. Why is it important to have a shareholder agreement? The shareholder agreement is intended to ensure that shareholders are treated fairly and that…

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