Fracking Your Goodwill

Our January 2016 newsletter is now available here for your information.  On December 7, 2015 the new federal government announced changes to the income tax laws that took effect January 1, 2016.  One opportunity of interest to take advantage of capital gains rates is commonly referred to as “goodwill fracking”.  This is a type of goodwill valuation that allows a business owner to incorporate a new professional corporation and purchase the operating assets and goodwill from the old professional corporation for fair market value. 

When goodwill is sold by a corporation, only 50% of its value is taxable, the other 50% is non-taxable and can be distributed to the shareholder as a tax-free capital dividend.  This is a very simplified explanation.  The newsletter goes into more details. Our tax department can go into even further detail than the newsletter.  

If you think goodwill fracking could benefit you or your corporation please don’t hesitate to contact our office at 613-235-2000 and ask to speak to Jacob Milosek.