Planning Your Business Exit Strategy and Timeline 2025 — Sell, Retire, or Transfer Your Business

Your business exit is your legacy. In 2025, CRA’s valuation algorithms, new capital gains rates, and updated Bill C-208 rules make early exit planning the key to keeping what you’ve built. Mackisen CPA Auditors Montreal guides business owners through a multi-year plan that maximizes value, minimizes tax, and ensures family or investor transitions succeed.

Legal and Regulatory Framework

Income Tax Act (Canada) Section 110.6(2.1): Provides LCGE for QSBC share sales up to $1,016,836 per shareholder.
Section 84.1: Prevents dividend reclassification in family sales; Bill C-208 enables compliant intergenerational transfers.
Section 85(1): Allows tax-deferred asset rollovers for pre-sale restructuring.
Section 70(5): Triggers deemed disposition at death; integration avoids estate double tax.
Section 55(2): Limits surplus-stripping; Mackisen ensures compliant reorganization.
Section 20(1)(a): Allows deduction of sale and valuation costs.
Taxation Act (Quebec): Requires LCGE and reorganization reporting; Mackisen aligns both federal and Quebec filings.

Key Court Decisions

McClurg v. Canada (1990): Validated share reorganizations for genuine business purpose.
Poulin v. The Queen (2016): Upheld LCGE eligibility on trust-held shares with proper documentation.
Kieboom v. The Queen (1992): Supported family share reallocations with economic justification.
Grosso v. The Queen (2014): Confirmed LCGE denial for corporations failing active-asset tests.

Why CRA Targets Exits

CRA audits exits to ensure fair-market valuations, related-party sale compliance, and LCGE documentation. Undervalued transactions, missing agreements, or Bill C-208 misapplications trigger reviews. Mackisen ensures CRA-defensible valuations and synchronized filings before closing.

Mackisen’s Strategy

1. Timeline Planning — Build a 3–5-year roadmap for corporate cleanup, valuation, and LCGE qualification.

2. Valuation and Reorganization — Prepare certified FMV reports and share reorganizations to maximize tax-free sale value.

3. LCGE Structuring — Multiply exemptions across family members and trusts.

4. Transaction Design — Compare asset vs share sale options under Sections 84.1 and 85.

5. Family Transfer Compliance — Implement Bill C-208-compliant share sales.

6. Post-Sale Integration — Invest proceeds through Holdcos, TFSAs, and IPPs for retirement income.

Real Client Experience

A Montreal manufacturer sold for $7 million; Mackisen’s LCGE structuring saved $1.4 million in tax. A Quebec family sold shares under Bill C-208 with Mackisen’s plan, qualifying for LCGE while retaining control.

Common Questions

When should I plan my exit? 3–5 years before sale to align LCGE and valuation.
Can I sell to my kids tax-free? Yes, if Bill C-208’s management and shareholding rules are met.
Is a share sale better than assets? Usually—shares qualify for LCGE and avoid double tax.

Why Mackisen

Mackisen CPA Auditors Montreal are Canada’s leaders in exit planning and business valuation. Our CPAs, CBVs, and tax lawyers develop defensible, tax-efficient strategies for every exit. Call Mackisen CPA Auditors Montreal today for your 2025 Business Exit Consultation. The first meeting is free and focused on maximizing your sale value.