6 worked Amalgamation Tax Return case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to amalgamation tax return work, not a specific client's file.
Case Study 1 · Deadline rescue
$134,000 Late-Filing Penalty Cancelled On Relief Application — Discretionary Family Trust, Guelph
Client: A discretionary family trust · Where: Guelph, Ontario · Engagement: 3 weeks, fixed fee
Penalty cancelled$134,000
Relief applicationGranted
ReturnAccepted as filed
The situation — A discretionary family trust, Guelph, Ontario
A discretionary family trust in Guelph, Ontario had already missed one deadline and was about to miss a second. Behind it sat a freeze completed years earlier with nothing on file to support the value placed on the preferred shares. A penalty of $134,000 was accruing.
What we did for A discretionary family trust, Guelph, Ontario
We split the work into what had to happen before the deadline and what could follow it. Then we moved the redundant investments out of the operating company into a holding company on a tax-deferred basis. That brought the asset mix back inside the qualified small business corporation tests.
The result — A discretionary family trust, Guelph, Ontario
The outstanding return was accepted as filed, and the taxpayer relief application cancelled $134,000 of the penalty already assessed on the earlier year.
Case Study 2 · Cash and remittance control
$135,000 Of Working Capital Freed From The Tax Cycle — Single-Shareholder Corporation, Lethbridge
Client: A single-shareholder operating company · Where: Lethbridge, Alberta · Engagement: 7 weeks, fixed fee
Working capital freed$135,000
On-time remittancesEvery period since
Forecast horizon13 weeks
The situation — A single-shareholder operating company, Lethbridge, Alberta
A single-shareholder operating company in Lethbridge, Alberta was profitable on paper and short of cash every month. A dividend paid up to the holding company with no safe income on hand computed behind it explained most of the gap.
What we did for A single-shareholder operating company, Lethbridge, Alberta
We filed the section 85 election on form T2057 with the elected amounts set at the cost amounts of the transferred property. We kept the non-share consideration inside those amounts, so nothing was realised on the transfer. We also built a thirteen-week cash view so tax payments stopped competing with payroll for the same dollars.
The result — A single-shareholder operating company, Lethbridge, Alberta
$135,000 was released back into working capital. Remittances have been on time every period since, and the forecast shows the tax outflow before it lands.
Case Study 3 · Scaling without breaking
Growth Handled Without A Missed Filing, $125,000 Freed — Amalgamating Company Group, Toronto
Client: A two-company group planning an amalgamation · Where: Toronto, Ontario · Engagement: 4 weeks, fixed fee
Cash freed$125,000
Compliance failuresNone
ReportingMonthly
The situation — A two-company group planning an amalgamation, Toronto, Ontario
A two-company group planning an amalgamation in Toronto, Ontario was opening in a second province. That meant different filing obligations and a different payroll regime. A capital dividend account balance that would have been lost on dissolution had the final distribution gone ahead as planned already sat in the file.
What we did for A two-company group planning an amalgamation, Toronto, Ontario
We wound the subsidiary up into its parent under subsection 88(1) and moved the property across at its cost amounts. We closed the subsidiary program accounts once the final return had been assessed. We then put monthly reporting in place. That let the owner see the cash effect of growth while there was still time to act on it.
The result — A two-company group planning an amalgamation, Toronto, Ontario
Growth was absorbed without a compliance failure. $125,000 of cash was released, and the monthly reporting now flags a problem while it is still small.
Case Study 4 · Missed incentive claimed
Incentive Review Recovered $102,000 Across 6 Open Years — Share Exchange Shareholder, Calgary
Client: A shareholder exchanging common shares for preferred shares · Where: Calgary, Alberta · Engagement: 6 weeks, fixed fee
Recovered$102,000
Open years claimed6
Ongoing trackingIn place
The situation — A shareholder exchanging common shares for preferred shares, Calgary, Alberta
An incentive review at a shareholder exchanging common shares for preferred shares in Calgary, Alberta started from a simple question: what has never been claimed? The answer ran to 6 years. It was driven by an investment portfolio accumulating inside the operating company, putting the qualified small business corporation tests at risk.
What we did for A shareholder exchanging common shares for preferred shares, Calgary, Alberta
We reorganised the share capital under section 86 and exchanged the founder common shares for fixed-value redeemable preferred shares. We issued the growth shares to the successors on a valuation the file could support, with a price adjustment clause behind it. We documented eligibility to the standard a reviewer would apply rather than the standard a claim form requires.
The result — A shareholder exchanging common shares for preferred shares, Calgary, Alberta
The credits produced $102,000 across the open years. The tracking now in place means the following year's claim is documented as the work happens rather than reconstructed afterwards.
Case Study 5 · Backlog brought current
Collections Halted And $93,000 Cut From A 7-Year Backlog — Incorporating Sole Proprietor, Vancouver
Client: An incorporating sole proprietor · Where: Vancouver, British Columbia · Engagement: 7 weeks, fixed fee
Balance reduced by$93,000
Backlog cleared7 years
CollectionsHalted
The situation — An incorporating sole proprietor, Vancouver, British Columbia
By the time an incorporating sole proprietor in Vancouver, British Columbia called, 7 years were outstanding. The CRA had assessed on estimates. Underneath it sat an inter-company balance and a shareholder loan left outstanding between the corporations being merged.
What we did for An incorporating sole proprietor, Vancouver, British Columbia
We reconstructed the records year by year. We reviewed the paid-up capital of each class, the capital dividend account and the eligible dividend designations before the final distribution. We dissolved the corporation and requested the clearance certificate. Each filing replaced an arbitrary assessment with a real one.
The result — An incorporating sole proprietor, Vancouver, British Columbia
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $93,000, and a relief application addressed part of the accumulated interest.
Case Study 6 · Objection and relief
$24,000 Of Penalties And Interest Cancelled On Relief — Buyout Shareholder, Mississauga
Client: A shareholder buying out a departing co-owner · Where: Mississauga, Ontario · Engagement: 8 weeks, fixed fee
Penalties and interest cancelled$24,000
Relief groundsAccepted
AssessmentAdjusted to filed position
The situation — A shareholder buying out a departing co-owner, Mississauga, Ontario
An assessment of $24,000 landed at a shareholder buying out a departing co-owner in Mississauga, Ontario following a desk review. It turned on an investment portfolio accumulating inside the operating company, putting the qualified small business corporation tests at risk. The auditor had not seen the records behind it.
What we did for A shareholder buying out a departing co-owner, Mississauga, Ontario
We computed safe income on hand share by share before any dividend was declared, and sized the dividend so subsection 55(2) had nothing to recharacterise. We then set out the legislative basis for the position alongside the documents supporting it.
The result — A shareholder buying out a departing co-owner, Mississauga, Ontario
$24,000 of penalties and interest was cancelled under the taxpayer relief provisions, and the underlying assessment was adjusted to match the filed position.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
