# Dissolve Corporation - Prior to Leaving Canada **URL:** \ **Category:** Tax Topics\ **Created:** [March 20, 2024, 3:55am UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085 "2024-03-20T03:55:07Z")\ **Posts on this page:** 10\ **Page:** 1
**Author:** ![vancouverite](https://avatars.discourse-cdn.com/v4/letter/v/9d8465/32.png) [@vancouverite](https://www.protaxcommunity.com/u/vancouverite)\ **Post date:** [March 20, 2024, 3:55am UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/1 "2024-03-20T03:55:07Z")
Hi, Interested in your takes on this scenario. A client runs a small 2 person corporation - Federally & Provincially incorporated. Both directors work in the business. It earns less than 100k per year, they receive dividends in lieu of salary. The business is 100% online, all clients are based in Canada. The directors want to emigrate back to their country of origin and they cannot afford to pay departure tax on the business which would probably be 50k. Do they dissolve the corporation before they leave so there are no shares to declare on day of departure? Can they set up a LLP in their next country, register for a GST account, and carry on their online business from overseas? What would you advise them to look into so that they could continue their business from abroad? ---
**Author:** ![Deepinthemoneycall](https://sea2.discourse-cdn.com/flex016/user_avatar/www.protaxcommunity.com/deepinthemoneycall/32/3832_2.png) [@Deepinthemoneycall](https://www.protaxcommunity.com/u/Deepinthemoneycall)\ **Post date:** [March 20, 2024, 6:33pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/2 "2024-03-20T18:33:05Z")
They will trigger the departure tax no matter what. However, this can be deferred by way of a collateral to the CRA by electing under form T1244. There is no need to dissolve the corporation completely. As the residency status of the corporation will change by way of the “mind and management” provisions as outlined within the ACT, the company will cease to be a CCPC for business purposes moving forward; subsequent to emigration and will be taxed at the general rate accordingly. You will need to factor in withholding taxes on any future dividends to shareholders. You can work around this by restructuring the controling votes to a resident shareholder. Consider all your circumstances before jumping to my conclusion, but this is the foundation of what will transpire. ---
**Author:** ![vancouverite](https://avatars.discourse-cdn.com/v4/letter/v/9d8465/32.png) [@vancouverite](https://www.protaxcommunity.com/u/vancouverite)\ **Post date:** [March 20, 2024, 7:04pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/3 "2024-03-20T19:04:34Z")
Thanks for commenting. It seems the income tax act specifies assets at the time of departure, however in this case the corporation would not exist on the day of departure. ---
**Author:** ![Deepinthemoneycall](https://sea2.discourse-cdn.com/flex016/user_avatar/www.protaxcommunity.com/deepinthemoneycall/32/3832_2.png) [@Deepinthemoneycall](https://www.protaxcommunity.com/u/Deepinthemoneycall)\ **Post date:** [March 20, 2024, 7:09pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/4 "2024-03-20T19:09:57Z")
The shares they own are deemed capital property and subject to departure tax at their FMV at the time of departure. The corporation still exists, it just looses it’s CCPC status if the controlling shareholders cease to be residents of Canada. ---
**Author:** ![vancouverite](https://avatars.discourse-cdn.com/v4/letter/v/9d8465/32.png) [@vancouverite](https://www.protaxcommunity.com/u/vancouverite)\ **Post date:** [March 20, 2024, 7:34pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/5 "2024-03-20T19:34:02Z")
It wouldn’t exist, literally. The corporation would be dissolved, all liabilities settled, no assets left to declare on he day of departure. ---
**Author:** ![Nezzer](https://sea2.discourse-cdn.com/flex016/user_avatar/www.protaxcommunity.com/nezzer/32/3845_2.png) [@Nezzer](https://www.protaxcommunity.com/u/Nezzer)\ **Post date:** [March 20, 2024, 8:30pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/6 "2024-03-20T20:30:46Z")
> [@vancouverite](#): > > Federally & Provincially incorporated Wow. Why would they do that? Isn’t that twice as much work and four times as much cost? > [@vancouverite](#): > > Do they dissolve the corporation before they leave If they want to, sure - why not? It’s their decision. > [@vancouverite](#): > > Can they set up a LLP in their next country, That will depend on the laws in THAT country - what types of business structures are allowed, and what they are called. For example, what does “LLP” mean in that country? > [@vancouverite](#): > > register for a GST account If that country has a GST system, they would have to determine how it works. GST is not something universal around the globe. If they continue to sell online goods or services to Canadian customers, they may need to register for a new Canadian GST account under the new cross-border rules: > **[Find out if you need to register for the GST/HST: GST/HST for digital...](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy-gsthst/find-out-need-register.html)** > > Find out what type of business category you fall under and if you will need to register for the GST/HST > [@vancouverite](#): > > What would you advise them to look into so that they could continue their business from abroad? Business laws and taxes that exist in the foreign country. ---
**Author:** ![Deepinthemoneycall](https://sea2.discourse-cdn.com/flex016/user_avatar/www.protaxcommunity.com/deepinthemoneycall/32/3832_2.png) [@Deepinthemoneycall](https://www.protaxcommunity.com/u/Deepinthemoneycall)\ **Post date:** [March 20, 2024, 9:11pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/7 "2024-03-20T21:11:05Z")
You’re contradicting yourself… you just asked if dissolution was an option, but now you’re saying it’s dissolved anyways? That’s not how that works. The corporation is still an entity for tax purposes regardless if the departure tax is triggered on the personal side. As I mentioned, you would loose CCPC status. If you’re stating however, that you are going to dissolve the corporation prior to departure, than yes, you are correct. ---
**Author:** ![vancouverite](https://avatars.discourse-cdn.com/v4/letter/v/9d8465/32.png) [@vancouverite](https://www.protaxcommunity.com/u/vancouverite)\ **Post date:** [March 20, 2024, 9:32pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/8 "2024-03-20T21:32:58Z")
Sorry if I wasn’t clearer earlier. The intention is to dissolve the corporation prior to leaving at the end of the year. There would be no assets/shares left to declare from the dissolved corporation at that point. ---
**Author:** ![abechew309](https://avatars.discourse-cdn.com/v4/letter/a/c77e96/32.png) [@abechew309](https://www.protaxcommunity.com/u/abechew309)\ **Post date:** [March 20, 2024, 9:47pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/9 "2024-03-20T21:47:16Z")
If its $50k now, there will still be that to pay upon dissolution, whenever that is. With a detailed knowledge of section 84, and also emigration effects, on studying the detail you can determine more precisely what it will be. Also, the directors must be able to afford to pay the $50k, otherwise it would not calculate to $50k in the first place. ---
**Author:** ![alexbarber23](https://avatars.discourse-cdn.com/v4/letter/a/48db29/32.png) [@alexbarber23](https://www.protaxcommunity.com/u/alexbarber23)\ **Post date:** [January 4, 2025, 10:55pm UTC](https://www.protaxcommunity.com/t/dissolve-corporation-prior-to-leaving-canada/8085/10 "2025-01-04T22:55:56Z")
There a number of issues to consider: It would appear that once non resident the company will be of no further use to them. The CCPC status will be lost also triggering a deemed year end. The company management decisions will be made from outside of Canada thereby probably triggering an alternative corporation tax residence although you don’t specify what country is their country of origin. Dissolution would result in no departure tax on the corporate shares but would obviously trigger some personal Canadian tax liabilities for the shareholders. The ability to continue to operate the company from their home country will need to be a commercial decision as all the clients are Canadian and they will need to evaluate their client base if this is realistic. My advice would certainly be dissolution as the cleanest exit route subject to the commercial considerations. If it is not commercially viable to operate the business outside of Canada a sale should be considered and utilization of lifetime capital gains tax limits within Canada before they become non resident and potentially expose themselves to capital gains tax in their home country.