6 worked Section 85 Rollover Assistance 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 section 85 rollover assistance work, not a specific client's file.
Case Study 1 · Backlog brought current
7 Years Filed, $97,000 Removed From The Assessed Balance — Investment-Heavy Operating Company, Barrie
Client: An investment-heavy operating company · Where: Barrie, Ontario · Engagement: 4 weeks, fixed fee
Years filed7
Assessed balance removed$97,000
CollectionsStopped
The situation — An investment-heavy operating company, Barrie, Ontario
An investment-heavy operating company in Barrie, Ontario had not filed for 7 years. The CRA had issued arbitrary assessments. The business was carrying an investment portfolio accumulating inside the operating company, putting the qualified small business corporation tests at risk. That came on top of a growing interest balance.
What we did for An investment-heavy operating company, Barrie, Ontario
We started with the oldest year and worked forward so each year's closing balances fed the next. 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 filed the years in sequence rather than all at once.
The result — An investment-heavy operating company, Barrie, Ontario
Every year is now filed and assessed on actual figures. The notional assessments were vacated and $97,000 of the estimated balance came off, with a payment arrangement covering the rest.
Case Study 2 · Objection and relief
$127,000 Of Penalties And Interest Cancelled On Relief — Single-Shareholder Corporation, Regina
Client: A single-shareholder operating company · Where: Regina, Saskatchewan · Engagement: 6 weeks, fixed fee
Penalties and interest cancelled$127,000
Relief groundsAccepted
AssessmentAdjusted to filed position
The situation — A single-shareholder operating company, Regina, Saskatchewan
An assessment of $127,000 landed at a single-shareholder operating company in Regina, Saskatchewan following a desk review. It turned on a capital dividend account balance that would have been lost on dissolution had the final distribution gone ahead as planned. The auditor had not seen the records behind it.
What we did for A single-shareholder operating company, Regina, Saskatchewan
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 set out the legislative basis for the position alongside the documents supporting it.
The result — A single-shareholder operating company, Regina, Saskatchewan
$127,000 of penalties and interest was cancelled under the taxpayer relief provisions, and the underlying assessment was adjusted to match the filed position.
Case Study 3 · Records and systems rebuilt
Month-End Close Cut From 11 Weeks To 7 Days — Owner Separating Surplus Assets, Surrey
Client: An owner separating surplus assets from the operating business · Where: Surrey, British Columbia · Engagement: 6 weeks, fixed fee
Close time before11 weeks
Close time after7 days
Year-endReview, not rebuild
The situation — An owner separating surplus assets from the operating business, Surrey, British Columbia
The accounting file at an owner separating surplus assets from the operating business in Surrey, British Columbia had a weak foundation. It was built on all future growth accruing to shares the founder already held, with no freeze in place. The year-end had taken 11 weeks each of the last three years.
What we did for An owner separating surplus assets from the operating business, Surrey, British Columbia
We cleared the inter-company balances and the shareholder loan before the reorganisation closed. We papered each step with the resolutions and agreements the structure has to rest on. We also moved the reconciliations into the monthly cycle, so the year-end stopped being a rebuild.
The result — An owner separating surplus assets from the operating business, Surrey, British Columbia
The file reconciles. Month-end closes in 7 days instead of 11 weeks, and the year-end is a review rather than a reconstruction.
Case Study 4 · Planning that cut the bill
Remuneration Review Saved $53,000 Across Corporate And Personal Returns — Succession-Planning Manufacturer, Vancouver
Client: A family-owned manufacturer planning succession · Where: Vancouver, British Columbia · Engagement: 11 weeks, fixed fee
Combined saving$53,000
ScopeCorporate + personal
Future yearsNo rework needed
The situation — A family-owned manufacturer planning succession, Vancouver, British Columbia
Nothing was wrong at a family-owned manufacturer planning succession in Vancouver, British Columbia. The filings were on time and accurate. What they were not was planned. A trust still holding capital property with its twenty-one-year deemed disposition inside the planning horizon had never been reviewed.
What we did for A family-owned manufacturer planning succession, Vancouver, British Columbia
We filed the short-year T2 for each predecessor corporation and chose the first year-end of the amalgamated corporation deliberately. We carried the predecessor loss balances forward under the continuity rules. We ran the numbers across both the corporate and personal returns, so the saving was real rather than deferred into someone else's hands.
The result — A family-owned manufacturer planning succession, Vancouver, British Columbia
$53,000 came off the combined corporate and personal tax bill, and the structure holds for future years without further work.
Case Study 5 · CRA review defended
$19,000 Proposed Adjustment Withdrawn In Full — Incorporating Sole Proprietor, Kelowna
Client: An incorporating sole proprietor · Where: Kelowna, British Columbia · Engagement: 10 weeks, fixed fee
Adjustment withdrawn$19,000
File closed in10 weeks
Penalties assessedNone
The situation — An incorporating sole proprietor, Kelowna, British Columbia
An incorporating sole proprietor in Kelowna, British Columbia received a proposal letter opening a review of section 85 rollover assistance. The CRA had identified an inter-company balance and a shareholder loan left outstanding between the corporations being merged. It proposed an adjustment of $19,000, with 30 days to respond.
What we did for An incorporating sole proprietor, Kelowna, British Columbia
We treated the response as an evidence exercise rather than an argument. 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. We then indexed every supporting document against the specific line the auditor had questioned.
The result — An incorporating sole proprietor, Kelowna, British Columbia
The proposed adjustment was withdrawn in full — all $19,000 of it. The file closed in 10 weeks with no change to the assessed amounts and no penalty.
Case Study 6 · Sale and succession
Intergenerational Transfer Completed With $550,000 Deferred — Three-Tier Corporate Group, Kitchener
Client: A three-tier corporate group · Where: Kitchener, Ontario · Engagement: 6 weeks, fixed fee
Tax deferred$550,000
TransferCompleted
RecordsReview-ready
The situation — A three-tier corporate group, Kitchener, Ontario
A generational transfer at a three-tier corporate group in Kitchener, Ontario had been discussed for years without a plan. Retained cash well above what the business needed to operate meant the transfer as contemplated would have been fully taxable.
What we did for A three-tier corporate group, Kitchener, Ontario
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 sequenced the steps so each one was complete and documented before the next depended on it.
The result — A three-tier corporate group, Kitchener, Ontario
$550,000 of tax was deferred through the transfer, and the successor generation took over a corporation whose records stood up to review.
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.
