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Hi Allan
My wife and I have an Incorporated small business in Canada and are looking to retire in 3 years and will become non residents in Canada. We will continue our online business abroad, do we need to dissolve the business in Canada due to no longer having primary ties here? The business is registered in Alberta. Thank you in advance!
When you become a non-resident of Canada, you are deemed to dispose of all of your assets (excluding cash, Canadian real estate, pensions, RRSPs and TFSAs). The deemed disposition rule applies to shares in the capital stock of a Canadian corporation. Furthermore, the deemed selling price of the shares is equal to the fair market value of the company as of the date of emigration from Canada. This can trigger a capital gain. Therefore, I suggest that you distribute the assets and cash retained earnings of the company to you in order to avoid capital gains taxes payable in the year of your departure. You can then dissolve the corporation.
Another option is to enter into a deferral agreement with the CRA to defer the payment of departure tax on your shares. Your shares must be pledged as security to the CRA.