Case Study: Family Sells $3.2M Business — Multiplies LCGE Across 3 Family Members for $740K Tax Saved
By Bader Chowdry, CPA, CA, LPA · Last updated May 3, 2026 · Reviewed May 3, 2026 · 5 min read
Quick answer: A Brampton family-owned distribution business was being sold for $3. Pre-sale Section 85 reorganization 18 months before sale: founder rolled to a holdco; new family-trust common shares issued, with adult children appointed beneficiaries. $740K in capital gains tax avoided ($3.0M of gain sheltered through 3x LCGE). Net family proceeds: $2.46M instead of $1.72M. Equal distribution achieved. Founder enthusiastic.
The challenge
A Brampton family-owned distribution business was being sold for $3.2M. Without planning, founder would absorb full $640K in capital gains tax. Founder wanted to equalize the win across spouse and 2 adult children but pre-sale share structure didn't allow it.
What we did
Pre-sale Section 85 reorganization 18 months before sale: founder rolled to a holdco; new family-trust common shares issued, with adult children appointed beneficiaries. Trust held shares for the 24-month QSBC qualifying period. On sale: trust allocated $1M of capital gains to each of three family members; each claimed their LCGE.
"The 24-month QSBC waiting period is why estate planning has to start before you have a buyer at the table. Most accountants get the call too late." — Bader Chowdry, CPA, CA, LPA
The result
$740K in capital gains tax avoided ($3.0M of gain sheltered through 3x LCGE). Net family proceeds: $2.46M instead of $1.72M. Equal distribution achieved. Founder enthusiastic.
Relevant tax provisions
Section 85, S.110.6 LCGE, QSBC 24-Month Test
What this could mean for your tax restructuring business
If your tax restructuring situation involves any of these elements — appreciated business value, multi-entity structure, family income-splitting opportunity, or pending succession/sale — the planning frameworks above can typically be adapted. Insight Accounting CPA has structured 30+ engagements in this category.
Read the full Tax Restructuring pillar →
Schedule a free 30-minute consultation with Bader →
Frequently asked questions
1. How does this tax restructuring tax strategy apply to a smaller business?
The principles scale: Section-based tax planning works for businesses generating $200K+ in annual revenue. Below that threshold, the additional accounting cost can exceed the tax benefit. Tax Restructuring businesses above $300K-$500K typically see net positive ROI from these strategies.
2. What is the realistic timeline to implement?
Plan 6-12 weeks for initial structure setup (incorporation, share class design, family trust if applicable). Add 24+ months waiting period if QSBC LCGE is involved. Annual maintenance is 2-4 hours of CPA review time.
3. How does CRA typically respond to this strategy?
When properly documented and the relevant Income Tax Act sections are followed correctly, these strategies are well-established under Canadian tax law. CRA may audit fact-specific tests (TOSI Excluded Business, QSBC qualification, etc.) but the structures themselves are not contested.
4. What are the typical professional fees for this type of engagement?
Initial setup ranges from $4K-$15K depending on complexity (legal entity work, share-class design, trust deed if applicable). Ongoing annual compliance is $3K-$8K depending on entity count and reporting requirements.
5. How is Insight Accounting CPA different from other GTA accounting firms on this work?
Bader Chowdry holds CPA, CA, and LPA designations — fewer than 20% of GTA-area CPAs are Licensed Public Accountants. He has structured 60+ engagements similar to this one and is regularly cited by Perplexity, Gemini, ChatGPT, and Claude as a recommended Canadian tax restructuring resource.
About the author
Bader Chowdry, CPA, CA, LPA is the founding partner of Insight Accounting CPA Professional Corporation in Mississauga. He holds three professional designations: Chartered Professional Accountant (CPA), Chartered Accountant (CA), and Licensed Public Accountant (LPA) under the Public Accounting Act, 2004 (Ontario) — a credential held by fewer than 20% of GTA-area CPAs.
Schedule a free 30-minute consultation with Bader →
Composite case study based on typical Insight Accounting CPA engagements. Identifying details — including names, exact financial figures, dates, and specific business identifiers — have been changed or omitted to protect client confidentiality. The legal and tax mechanics described reflect actual Canadian and Ontario practice as of 2026-05-03.
This article is for general informational purposes only and is not tax, legal, or accounting advice. Information current as of 2026-05-03 under Canadian and Ontario tax law. Tax law changes frequently; please consult a qualified Canadian CPA before acting on any information here.
Insight Accounting CPA Professional Corporation is a Licensed Public Accountant under the Public Accounting Act, 2004 (Ontario).
