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Accounting for Estates and Business Succession

Best Practices for Protecting Business Assets and Ensuring a Smooth Transition

Presented by: Kenneth Michalak, CPA

Kenneth Michalak, CPA Professional Corporation

November 6, 2025

Disclaimer

This material is for educational purposes. Every effort has been made to ensure its accuracy, but real-life situations are often very fact specific. CRA may not necessarily agree with all of the content. Professional advice should be obtained in any given situation. Kenneth Michalak, CPA Professional Accountant Corporation

and the presenter does not assume any liability for reliance on this material.

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TAX RATES
2025 Personal Rates (Ontario)
Personal Taxable Income

		Employment	Capital	Dividends	Dividends
Lower	Upper	Other Income	Gains	Eligible	Non Eligible

0.00	52,886.00	19.55	9.78	0.00	8.66
52,886.00	57,375.00	23.65	11.83	0.00	13.38
57,375.00	93,132.00	29.65	14.83	6.39	20.28
93,132.00	105,775.00	31.48	15.74	8.92	22.38
105,775.00	109,727.00	33.89	16.95	12.24	25.16
109,727.00	114,750.00	37.91	18.95	17.79	29.78
114,750.00	150,000.00	43.41	21.70	25.38	36.10
150,000.00	177,882.00	44.97	22.48	27.53	37.90
177,882.00	220,000.00	48.28	21.14	32.10	41.71
220,000.00	253,414.00	49.84	24.92	34.25	43.50
253,414.00	Infinity	53.53	26.76	39.34	47.74



TAX RATES
Corporate Income Tax Rates for 2025
Ontario
			Canadian Controlled Private Corp

	General	General	ABI To		Investment
	Non-M&P	M&P	500,000		Income


Ontario	11.50	10.00	3.20		11.50
Federal	15.00	15.00	9.00		38.70
Combined	26.50	25.00	12.20		50.20

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Why This Matters

Protects business value during transition
Insures legal and financial compliance
High tax exposure on death (deemed disposition)
Supports smooth succession for heirs or buyers

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Core Objectives of Estate & Succession Planning

Preserve and protect business value
Ensure liquidity for taxes and buyouts
Facilitate ownership and management continuity
Minimize taxes and disputes
Maintain family harmony

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Foundational Accounting Considerations

Review entity structure (sole proprietor, partnership, corporation)
Prepare FMV-based financials for transition
Separate personal and business assets
Document shareholder loans and equity
Ensure readiness for due diligence

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Business Valuation Essentials

Valuation approaches: Asset, Income, Market
Normalize earnings and remove non-recurring items
Identify tax pools: ERDTOH, NERDTOH, CDA, GRIP
Apply FMV adjustments and discounts
Coordinate with CBV where necessary

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Protecting and Transferring Assets

Holding companies for asset protection and deferral
Family trusts for flexibility and income splitting
Estate freezes to lock in founder’s value
Buy-sell agreements for continuity
Corporate-owned life insurance for liquidity

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Key Tax Planning Elements

Deemed disposition rules (s.70(5))
Lifetime Capital Gains Exemption (QSBC shares)
Post-mortem strategies: pipeline vs. loss carryback
Intergenerational transfers
GST/HST implications on transfers (sole proprietorship)

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Risk Management & Asset Protection

Separate operating vs. investment assets
Use of multiple corporations for risk segregation
Key-person and shareholder insurance
Ensure liquidity for taxes or buyouts
Regular structure review for evolving risk

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Governance & Family Dynamics

Establish shareholder agreements and family councils
Develop next-generation leadership early
Set expectations for roles and ownership
Mediate family and management conflicts

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The Accountant’s Role

Coordinate advisors (legal, tax, valuation, insurance)
Manage CRA compliance (T3, T2057, T1 Final, etc.)
Ensure valuation and documentation accuracy
Provide post-transition financial guidance
Track tax attributes and reorganizations

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Best Practice Checklist

Regular structure and will reviews
Maintain shareholder loan clarity
Track CDA, RDTOH, GRIP
Maintain FMV documentation
Fund buy-sell agreements
Collaborate across disciplines

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Closing & Q&A

Early planning = more flexibility
Accountants play a central coordination role
Integrate tax, legal, and family objectives
Protect value and legacy for next generation

Kenneth Michalak

KENNETH MICHALAK, CPA PROFESSIONAL CORPORATION

62 JANE ST

TORONTO, ONTARIO M6S 3Y4

TEL: 416-588-2808 EXT 21

EMAIL: kenmicha@look.ca WEB: kjmcga.com