In an intergenerational business transfer (IBT), the purchaser does not generally acquire control of the targetco for the purposes of the rule in ITA paragraph 88(1)(d.2). As a result, the tax cost of the eligible assets of targetco likely cannot be bumped under 88(1)(d). The CRA also takes the position that, in a related-party transaction, the purchaser cannot discount the price payable for shares by taking into account the latent tax associated with targetco’s property. These two features of IBTs compare unfavourably to similar transactions undertaken by unrelated parties.
Julien Theberge “Intergenerational Business Transfer: Appearance of Parity with a Third-Party Sale?” Tax for the Owner-Manager 26:2 (April 2026)
