Ayodapo Alalade-Ayinla, CPA

10/03/2025

Kemi is the sole shareholder of Kemtech Ltd. (Kemtech). Her common shares have a cost basis of $1,000,000, which equals their fair market value. The paid-up capital (PUC) of the shares is $100. Redeeming the shares would result in a deemed dividend of $999,900, leading to a significant tax liability and a double-taxation scenario.

The recommended solution is a pipeline transaction, which involves the following steps:
- Exchange the common shares for preferred shares.
- Transfer the preferred shares to Holdco in exchange for preferred shares of Holdco.
- Sell Holdco’s preferred shares (held by Kemi) to Kemtech for cash.
*** Proceeds ($1,000,000) minus adjusted cost base (ACB) ($1,000,000) = nil.
- Holdco redeems the preferred shares held by Kemtech in exchange for a note payable.
- Kemtech redeems the preferred shares held by Holdco in exchange for a note payable.
- Holdco and Kemtech agree to set off their note payable/receivable.
In the end, Kemi receives $1,000,000 from Kemtech without incurring any additional tax.

Please note that the information provided is general in nature and involves complex tax considerations with potential traps and pitfalls. It should not be considered a substitute for professional tax advice. Consult your tax advisor for personalized guidance.

10/01/2025

Tobi, the sole shareholder of Timtem Ltd. (Timtem), would like to creditor-proof Timtem. He is also considering selling the business within the next 3 to 5 years. Additionally, he wants to be able to split income and future growth with his wife and children, as they all work full-time for Timtem.

The fair market value of Timtem is approximately $5 million, including property and equipment used in active operations, plus $3 million in excess cash.

Solution:
- Form two corporations: Holdco and Investco.

- Create a discretionary family trust, with beneficiaries including Tobi, Temi, Timi, Tayo, and Investco.

- Execute an estate freeze within Timtem.

- Holdco subscribes to common shares of Timtem.

- Transfer assets used in active operations from Timtem to Holdco.

- Transfer excess cash from Timtem to Investco.

- Eventually, the family trust would sell the shares of Holdco. The proceeds would be allocated to Tayo, Timi, Temi, and Tobi, who could utilize their Lifetime Capital Gains Exemption (LCGE) to minimize or eliminate taxes payable on the sale of the business. This is possible because those shares would qualify as Qualified Small Business Corporation (QSBC) shares, resulting in significant tax savings.

Please note that the information provided is general in nature and involves complex tax considerations with potential traps and pitfalls. It should not be considered a substitute for professional tax advice. Consult your tax advisor for personalized guidance.

10/01/2025

Happy Independence Day 🇳🇬!

09/30/2025

The weather in rural Alberta and Saskatchewan can be unpredictable, but medical travel is! Living here often means traveling for medical appointments. The good news is that these trips may be eligible for the Medical Expense Tax Credit if you travel at least 40 kilometres.

If you had to travel at least 40 kilometres (one way) from your home to access medical services not available nearby, took a reasonably direct route, and it was reasonable under the circumstances to travel to that location for those medical services, you may be able to claim the public transportation expenses you incurred as medical expenses. When public transportation isn't readily available, you may also be able to claim vehicle expenses.

Additionally, if you traveled at least 80 kilometres (one way) from your home to obtain medical services, you may be able to claim accommodation, meal, and parking expenses.

No receipts? No problem — you can use the simplified method for calculating your meal and vehicle expenses.

Please note that the information provided is general in nature and should not be considered a substitute for professional tax advice. Consult your tax advisor for personalized guidance.

09/29/2025

Why do I think corporate permanent life insurance is important?

The insurance proceeds can be used to fund estate taxes. This is particularly important when the majority of the estate's value is tied up in long-term assets that cannot be easily liquidated.

The insurance proceeds will be added to the capital dividend account, which can be used to fund the buyback of some shares of the corporation owned by the estate. This could save the estate a significant amount in taxes.

The comments above are general in nature and should not be construed as, or used as a substitute for, professional tax advice. Please consult your advisor.

09/29/2025

Happy birthday to you, dearest Josiah. You will live long and prosper in Jesus' Name.

09/29/2025

Samuel is the sole shareholder of Sammy Ltd., a Canadian private corporation. The fair market value of the company is $20,000,000, and the adjusted cost base of the shares is $100.

In preparation for retirement, Samuel wants his only child, Toni, to take over the company while he mentors him and retains control. Toni is 25 years old and does not have the funds to purchase Samuel’s shares.

Solution:
We implemented an estate freeze in Sammy Ltd. by exchanging and cancelling Samuel’s common shares in return for preferred shares. Immediately afterward, Toni subscribed for new common shares of Sammy Ltd. from treasury.

The situation described above is general in nature and should not be construed as, or used as a substitute for, professional tax advice. Please consult your advisor.

12/11/2024

FYI - I don't have access to my primary Facebook account. You can reach me here however.

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11/23/2024

11/16/2024