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then subscribes for common shares at a nominal value. At this point, there are no tax implications because the parent will not have made a taxable disposition, but the parent can then be paid out over time, through dividends and/or by the company buy- ing back the preferred shares. Selling the shares triggers a capital gain for the parent, but this can be sheltered using the LCGE.

See diagram on page 19,

which illustrates the owner- ship structure after a basic estate freeze.

REMEMBER THE 5 Ps! A time-honoured saying in the British Army is that ‘proper planning prevents poor per- formance’. The key to suc- cess when stepping away from your business is clear communication with all the interested parties and pro- fessional advisors at all times. Having your business in a saleable condition long before a buyer appears is the best way to maximize value, while a sale concluded in a rush, or presented as a fait accompli to family, staff (or customers) is likely to end in disaster, as misunderstandings and incompatible ex pecta- tions drive people apart. You worked hard to build the business; you, and it, deserve better than that. n

Martin Saxton is a qualified accoun- tant and co-founder of FreeLoader Products, Inc., and can be reached at 800-610-3572 or


All of the stakeholders (owners, family members and staff) understand the objective of the sale, and know that their interests are protected. Corporate records are up-to-date, taxes filed and no outstanding legal issues. Business showing at its best. Fresh decor and signage, equipment and premises clean and tidy.

Building lease having a number of years remaining. Simple value-adds taken care of, website updated, client database up-to-date.

by Jacquelyn Stevens

Jail Time and Hefty Fines


Environment and Climate Change Canada has used updated legislation to crack down and levy large fines on non-compliant dry cleaners. Convicted dry cleaners have faced fines ranging from $9,500 to $60,000 regardless of their prior history of compliance with the Canadian Environmental Protection Act, 1999 (CEPA). One dry cleaner has even been sentenced to jail time for non-compliance with the Tetrachloroethylene Regu- lations. In 2012, the Environmental Enforcement Act (EEA) amend- ed the Canadian Environmental Protection Act, 1999 (CEPA) to impose tougher punishments on certain contraventions of CEPA, including contravention under the Tetrachloroethylene Regulations. As a result, designated serious offences carry hefti- er fine ranges with mandatory minimum fines. (See chart.) Second and subsequent offences can result in double fines. If convicted, directors and officers of corporations can be subject

to the same fines as the corpo- rations themselves under CEPA. In addition to changes to the fine scheme, the EEA also increases the limitation period for Environment and Climate Change Canada to institute summary proceedings from two to five years.


Since June 2012, several dry cleaning companies have been prosecuted for offences under CEPA that carry the elevated penalties prescribed by the EEA. For example: • In 2013, a dry cleaning com- pany was fined $60,000 for multiple offences including improper storage and con- tainment of tetrachloro- ethylene waste water and residue.

• In 2014, a dry cleaning com- pany was fined $9,500 for improper storage of tetra- chloroethylene and for not having proper secondary containment present.

• In 2015, a dry cleaning com- pany was fined $25,000 for improper storage of tetra- chloroethylene.

New Fine Scheme under the Environmental Enforcement Act OFFENDER




FINE Designated offences Individuals Other offences N/A $25,000 N/A $100,000 $5,000 FINE $300,000 INDICTMENT


FINE $15,000 $1 M

*Small Revenue

Corporations & ships under 7,500 tonnes

Designated offences Other offences

$25,000 N/A

$2 M $50,000

$75,000 N/A

$4 M $250,000

Corporations & ships

of 7,500 tonnes or more

Designated offences Other offences

$100,000 N/A

$4 M $250,000

$500,000 N/A

$6 M $500,000

*Small Revenue Corporations are considered to be corporations with revenues under $5,000,000 in the 12 months preceding the offence in question.


Source: Canada, Environment Canada.

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