Planning Your Business Exit Strategy and Timeline 2025 — How to Sell, Retire, or Transfer Your Business Tax-Efficiently

Exiting your business is the final chapter in your entrepreneurial journey, and the way you plan it determines your legacy. In 2025, new CRA audit systems, the increased capital gains inclusion rate, and stricter intergenerational transfer regulations under Bill C-208 make proactive exit planning more critical than ever. Mackisen CPA Auditors Montreal provides complete exit strategies that combine valuation, tax structuring, and retirement integration to help business owners transition smoothly, maximize proceeds, and avoid CRA reassessments.

Legal and Regulatory Framework

Income Tax Act (Canada) Section 110.6(2.1): Provides the Lifetime Capital Gains Exemption (LCGE) of $1,016,836 on Qualified Small Business Corporation (QSBC) shares, which Mackisen leverages to shelter tax during sale or succession.
Section 84.1: Prevents dividend stripping through related-party transactions; Bill C-208 (2021) modifies these rules to allow legitimate family transfers with clear management succession.
Section 85(1): Enables tax-deferred rollovers for asset transfers, a cornerstone of pre-sale restructuring.
Section 70(5): Deems assets disposed of at fair market value upon death, requiring estate integration into exit planning.
Section 55(2): Restricts surplus-stripping transactions; Mackisen ensures reorganizations remain compliant and defensible under audit.
Section 20(1)(a): Permits deduction of professional and valuation fees related to sale or transition.
Taxation Act (Quebec): Requires dual compliance for both federal and provincial filings; Mackisen coordinates all transactions to meet CRA and Revenu Québec requirements.

Key Court Decisions

McClurg v. Canada (1990): Confirmed that share reorganizations for estate or family purposes are legitimate if motivated by genuine business objectives.
Grosso v. The Queen (2014): Highlighted that failing QSBC active asset tests can disqualify LCGE eligibility.
Poulin v. The Queen (2016): Upheld LCGE claims on trust-held shares when documentation was complete.
Kieboom v. The Queen (1992): Validated family share transfers where business intent and economic fairness were demonstrated.
These decisions form the legal foundation for how Mackisen structures compliant and tax-efficient exits.

Why CRA Targets Business Exits

CRA focuses on business exits where valuation appears inconsistent, related-party transactions lack documentation, or capital gains are underreported. Common triggers include unrealistically low sale prices, missing share-purchase agreements, or non-compliant Bill C-208 transactions. CRA also scrutinizes LCGE claims and goodwill allocations. Mackisen eliminates these risks through defensible valuations, detailed legal documentation, and full CRA alignment from start to finish.

Mackisen’s Strategy

1. Timeline Creation — Establish a 3–5-year roadmap aligning retirement goals, valuation growth, and family transition objectives.

2. Corporate Cleanup — Purify the corporation by removing passive investments and restructuring ownership to meet QSBC requirements.

3. Valuation and Appraisal — Prepare certified fair market valuations that support sale negotiations and CRA audits.

4. LCGE Maximization — Ensure each eligible shareholder benefits from their full $1,016,836 exemption to multiply tax-free proceeds.

5. Transaction Structuring — Evaluate share versus asset sales and execute the most advantageous strategy using Sections 84.1 and 85.

6. Family Transfer Design — Implement Bill C-208-compliant transactions ensuring continuity of management and tax compliance.

7. Post-Sale Integration — Move sale proceeds into holding companies, TFSAs, or IPPs for tax-efficient retirement and estate planning.

Real Client Experience

A Montreal logistics company owner began planning with Mackisen five years before retirement. Through share reorganization and LCGE optimization, the owner and spouse saved $1.6 million in tax upon sale.
A Quebec engineering firm sold to its next generation under Bill C-208. Mackisen structured the transaction to meet CRA’s active-management criteria and defended it successfully during review, preserving LCGE benefits.

Common Questions

How early should I begin planning my exit? Ideally 3–5 years before your sale to meet LCGE, valuation, and corporate purification requirements.
Can I sell my business to my children without losing LCGE? Yes, if Bill C-208’s control and management tests are met.
Is a share sale better than an asset sale? Generally yes, since share sales qualify for LCGE and reduce double taxation.
Do I need a formal valuation for CRA? Yes, certified CBV valuations are mandatory for defensible reporting.

Why Mackisen

Mackisen CPA Auditors Montreal are Canada’s leading experts in business exit, succession, and valuation planning. Our CPAs, CBVs, and tax lawyers develop detailed roadmaps that combine tax optimization, legal compliance, and retirement integration. We manage the process from valuation through sale to post-closing wealth planning. Call Mackisen CPA Auditors Montreal today for your 2025 Business Exit Strategy Consultation. The first meeting is free and designed to protect your wealth and legacy.