Why should I pay for a formal business valuation when I'm only "selling" my business to my kids?  Can't I just make a reasonable guess myself?

Inter-generational wealth transfers are more complicated than some may think.  Complex tax forms must be filled out and a strong business valuation must support the figures that are being used in the tax filings.  Canada Revenue Agency can assess penalty taxes in cases where it does not appear as though a legitimate attempt was made at determining Fair Market Value. 

For example, CRA could deem your selling price to be the higher of Fair Market Value and the price used for the sale.  Then, CRA could also deem the price paid for the business to be the lower of the two.  This results in double-taxation for the entire difference between the two figures, which could be a very substantial amount.

Clearly, there are significant risks associated with not investing the time in having an independent party prepare a proper business valuation.  We would be pleased to further discuss this matter, or any other concerns you may have,  with you in order to give you the comfort you need to move forward.  

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