6 worked Purchase and Sale Tax Due Diligence 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 purchase and sale tax due diligence work, not a specific client's file.
Case Study 1 · Scaling without breaking
Scaled To 55 Staff With $95,000 Of Working Capital Freed — Practice Adding Partners, Brampton
Client: A professional practice adding partners · Where: Brampton, Ontario · Engagement: 8 weeks, fixed fee
Headcount reached55
Working capital freed$95,000
Missed deadlinesZero
The situation — A professional practice adding partners, Brampton, Ontario
A professional practice adding partners in Brampton, Ontario was growing fast, with headcount reaching 55 in eighteen months. The back office had not kept up. An owner making hiring decisions on last quarter’s bank balance was the first thing to break.
What we did for A professional practice adding partners, Brampton, Ontario
We produced a board-ready monthly package — cash, margin, pipeline and covenant headroom — that replaced a spreadsheet nobody trusted. We built the compliance calendar for the size the business was becoming rather than the size it had been.
The result — A professional practice adding partners, Brampton, Ontario
The business reached 55 staff with no missed remittance and no late filing. $95,000 of working capital was freed in the process.
Case Study 2 · Cash and remittance control
Instalments Rebased, $98,000 Of Cash Returned To The Business — Corporation Facing Covenant Test, Kelowna
Client: A corporation approaching a covenant test date · Where: Kelowna, British Columbia · Engagement: 11 weeks, fixed fee
Cash returned$98,000
Instalment basisCurrent year
ReviewedQuarterly
The situation — A corporation approaching a covenant test date, Kelowna, British Columbia
A corporation approaching a covenant test date in Kelowna, British Columbia was paying instalments calculated on a prior year. That year no longer reflected the business. A healthy bank balance made up almost entirely of deposits for work not yet performed was tying up $98,000 of cash.
What we did for A corporation approaching a covenant test date, Kelowna, British Columbia
We rebased the instalments on the current-year estimate rather than the prior-year default. Alongside that, we set a quarterly tax provision, so the instalments and the year-end balance were funded before they came due.
The result — A corporation approaching a covenant test date, Kelowna, British Columbia
$98,000 of cash stayed in the business, the penalty cycle ended, and the instalment position is reviewed each quarter against actual results.
Case Study 3 · Deadline rescue
6-Week Turnaround Beat The Deadline And Saved $107,000 — Acquiring Clinic Group, Ottawa
Client: A clinic group acquiring a competitor · Where: Ottawa, Ontario · Engagement: 6 weeks, fixed fee
Late-filing penalty avoided$107,000
Filed with19 days to spare
Next yearPapers ready
The situation — A clinic group acquiring a competitor, Ottawa, Ontario
A clinic group acquiring a competitor in Ottawa, Ontario was weeks away from the deadline for purchase and sale tax due diligence. Behind that sat a monthly report that stopped at the income statement, with no balance sheet and no cash view. The exposure if the date slipped was around $107,000.
What we did for A clinic group acquiring a competitor, Ottawa, Ontario
We separated customer prepayments from earned revenue in the reporting, so the cash position and the tax position were visible at the same time. The filing went in complete rather than provisional, so there was no amended return to follow.
The result — A clinic group acquiring a competitor, Ottawa, Ontario
Filed with 19 days to spare. $107,000 in late-filing penalties avoided, and the working papers are ready for the following year.
The situation — A fast-growing e-commerce brand, Regina, Saskatchewan
The structure at a fast-growing e-commerce brand in Regina, Saskatchewan needed fixing. The file was carrying pricing set by feel, with no visibility into margin by service line. Every option for fixing it ran through a reorganisation that had to be done without triggering tax.
What we did for A fast-growing e-commerce brand, Regina, Saskatchewan
We worked with the client's lawyer. Together, we built a rolling thirteen-week cash-flow model, tightened collections, and renegotiated supplier terms so the growth stopped consuming the bank balance. We also prepared the elections, resolutions and valuations the structure needed to stand up.
The result — A fast-growing e-commerce brand, Regina, Saskatchewan
The structure now matches the business. Annual saving of $41,000, and the reorganisation itself was tax-neutral.
Case Study 5 · Sale and succession
$800,000 Sheltered By The Lifetime Capital Gains Exemption — Multi-Line Service Business, Guelph
Client: A business whose margin varies by service line · Where: Guelph, Ontario · Engagement: 10 weeks, fixed fee
Gain sheltered$800,000
ClosingOn schedule
Share qualificationMet
The situation — A business whose margin varies by service line, Guelph, Ontario
A business whose margin varies by service line in Guelph, Ontario had an offer on the table and 21 months to close. The shares did not qualify for the capital gains exemption. A single shareholder holding every share, with no room to multiply the exemption was part of the reason.
What we did for A business whose margin varies by service line, Guelph, Ontario
We purified the corporation so the shares met the qualifying tests. We traced each borrowing to what it actually funded and kept the interest deduction on the portion used to earn business income. All of it was done well ahead of the closing date.
The result — A business whose margin varies by service line, Guelph, Ontario
The sale closed on schedule with $800,000 sheltered by the lifetime capital gains exemption across the shareholders.
Case Study 6 · CRA review defended
$49,000 Proposed Adjustment Withdrawn In Full — Second-Province Distributor, Winnipeg
Client: A distributor entering a second province · Where: Winnipeg, Manitoba · Engagement: 11 weeks, fixed fee
Adjustment withdrawn$49,000
File closed in11 weeks
Penalties assessedNone
The situation — A distributor entering a second province, Winnipeg, Manitoba
A distributor entering a second province in Winnipeg, Manitoba received a proposal letter opening a review of purchase and sale tax due diligence. The CRA had identified a borrowing drawn for an unrelated personal purchase with the interest claimed against the business. It proposed an adjustment of $49,000, with 30 days to respond.
What we did for A distributor entering a second province, Winnipeg, Manitoba
We treated the response as an evidence exercise rather than an argument. We rebuilt the reporting around gross margin by service line, which showed two of five offerings were losing money at the current price. We then indexed every supporting document against the specific line the auditor had questioned.
The result — A distributor entering a second province, Winnipeg, Manitoba
The proposed adjustment was withdrawn in full — all $49,000 of it. The file closed in 11 weeks with no change to the assessed amounts and no penalty.
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.
