Are there tax consequences when I amalgamate two Ontario corporations?

Amalgamation under the Ontario Business Corporations Act or Canada Business Corporations Act merges two or more corporations into one successor corporation. For tax purposes, a qualifying amalgamation is generally treated as a continuation of the predecessor corporations rather than a disposition of their assets, so no capital gains or recapture are triggered on the amalgamation itself. The successor inherits the tax attributes of the predecessors.

The successor can generally carry forward non-capital losses of the predecessor corporations, but restrictions apply. If the amalgamation results in a significant change in the business carried on, or a change in control, loss carryforward availability can be limited. Change-of-control rules in the Income Tax Act are technical and must be reviewed before any amalgamation that involves arm's-length parties.

There are also GST/HST, payroll account, and corporate filing considerations — accounts do not automatically merge without notifying the CRA. Amalgamations with non-resident shareholders or foreign subsidiaries introduce additional complexity. Legal and tax counsel should be involved before signing an amalgamation agreement.