51 Swap

You may be able to take advantage of Section 51 of the Income Tax Act and “swap” or exchange your common shares for special shares in a company. This method is a form of “freeze,” but does not involve filing articles of amendment. It can only be used by the same company (i.e. you cannot transfer shares to a holding company), and there is no limitation period to stop the CRA from reviewing the transaction at any time in the future. However, it is very useful in converting an equity shareholder to a debt shareholder (which is common for special shares).

To discuss if a 51 Swap might be a good option for your business, Contact Us today.