Bob Gauvreau explains that business valuations are essential for sophisticated tax planning (succession, estate planning, business restructuring, trusts, buyouts, employee ownership). He emphasizes that the Income Tax Act requires transactions between related parties to be at fair market value, and the recommended way to establish that is a formalized business valuation report prepared by a chartered business valuator.
Questions this video answers
Bob Gauvreau.
Obtain a formalized business valuation report prepared by a chartered business valuator.
Chapters
So one of the most common areas, especially working within our office, where business valuations comes up, is any sort of sophisticated tax planning, which could mean, you know, succession planning, which could mean estate planning. It could also mean business restructuring. If we want to introduce a family trust, if we want to establish new shareholders, if we want to do a buyout or bring some of our employees in as owners, all of those would establish some sort of triggering event at fair market value. And if that's the case, the one way to establish what the fair market value is and what it truly is, and that's backed up and supported by, you know, a professional in this space, is to get a formalized business valuation completed. In this case, essentially we establish with a complex report, a sophisticated complex report, what your business is worth so that any of this tax planning can be recorded at fair market value. The Income Tax act is not very friendly in circumstances where transactions do not take place at fair market value, especially when you're a non arm's length party, meaning that you're related or you're connected in some form or fashion. So if that's the case and there's transactions happening, specifically any sort of buyout or sale of the business, anything that's really related to tax planning elements with your business, we need to establish a fair market value so that all of these transactions happen at fair market value. The only way to do that is to get a formalized business valuation report by one of our chartered business valuators. And we're so excited that our team would be able to help you and support you with that.
