Lifetime capital gains exemption

Another considerable tax benefit of incorporation is the ability to claim the $866,912 lifetime capital gains exemption on the sale of shares of a qualifying business. 

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Many healthcare professionals such as dentists, optometrists and owners of medical clinics can greatly benefit from this exemption when they sell the shares of their practice.

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There are certain criteria determined by law that need to be met in order for the corporation to qualify. The rules surrounding the capital gains exemption can be complex. However, if the corporation qualifies, the owner can sell the first $866,912 of capital gains on the shares exempt from tax. 

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This exemption can even be multiplied by implementing a family trust to the professional’s corporate structure.

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If the corporation does not qualify for the lifetime capital gains exemption because it does not meet the strict criteria determined by law, the corporation may need to be “purified” by removing any contaminating assets, such as excess cash or inactive assets in the business. 

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Our team of experienced lawyers can assist you in setting up your practice efficiently in order to benefit fully from this exemption.