Canada: Shareholders

For too long, Canadian tax law penalized business owners who wanted to keep their life’s work in the family. A sale to a stranger entitled the vendor to the lifetime capital gains exemption (LCGE) — currently $1,302,938 for 2026, indexed annually — sheltering over a million dollars of gain from tax.

Family-owned businesses often start governing themselves informally, with an understanding between siblings or cousins that works fine until the family, or the business, outgrows it. Two publications help explain what effective family enterprise governance looks like, and why it's worth the effort of building it deliberately rather than leaving it to chance.

A recent Alberta court decision provides critical guidance on Canadian sanctions compliance, examining how businesses must assess whether counterparties are controlled by sanctioned entities through voting power, board composition, and governance structures. The case demonstrates that sanctions screening extends far beyond checking names on official lists, requiring deeper analysis of corporate ownership chains and practical control mechanisms.

The Tax on Split Income (TOSI) rules remain among the most complex and misunderstood areas of Canadian private corporation tax planning.

When a business is sold, whether through a share sale or an asset sale, the purchaser almost invariably demands restrictive covenants—such as a non-competition or non-solicitation agreement—from the selling shareholders or key principals.

In Malek v The King (2026 TCC 84), the Tax Court of Canada examined the Canada Revenue Agency’s (CRA) use of the net worth assessment method against a trucking corporation and its shareholder-managers.

You may think you know who owns your company. You may not.

Canada’s Income Tax Act contains several provisions that can treat certain corporate transactions as dividends even when no dividend has been formally declared. These rules, commonly referred to as the deemed dividend rules, are primarily found in Section 84 of the Income Tax Act.

Shareholder loan tax rules in Canada remain one of the most common sources of CRA shareholder loan audits and reassessments for owner-managed corporations.