What Do I Need to Gather Before Moving Assets or Shares Into Another Corporation?

The four piles of paper, and why each one exists

Every record we ask for before a rollover exists to support one number: the elected amount, the value at which you and the corporation jointly agree the property changes hands for tax purposes. The rules give that number a band. It generally cannot be less than any non-share consideration you take back, such as cash or debt the corporation assumes, and it cannot be more than the property's fair market value; within that band, electing at your tax cost is what defers the gain. So the paperwork breaks into four piles: what the property cost, what it is worth, what is owed against it, and the legal documents that make the transfer real. Here is the working checklist we build with clients before any Section 85 rollover.

None of this is busywork. A rollover with weak support behind its numbers is still a rollover, right up until the CRA reviews it, and by then the choices have narrowed.

There is a fifth pile in practice: the asset list itself. Not everything can roll under section 85, and not everything should. Cash never needs an election, because it carries no accrued gain. Accounts receivable are usually moved under a separate joint election designed for them, so that any later bad debts keep their ordinary treatment. Real estate held as inventory, as opposed to as capital property, is excluded from the rollover entirely. So part of the intake is walking the balance sheet line by line and marking what rolls under the election, what transfers beside it, and what should stay behind.

Cost records: building the ACB and UCC file

The adjusted cost base is the single most important number in the file, because electing at tax cost is what makes the transfer tax-deferred. For shares, that means tracing what you actually paid or subscribed for them, plus anything that adjusted the cost along the way: earlier rollovers, reinvested amounts, corporate reorganizations that swapped one class for another. For real estate and equipment, it means the original closing documents plus every capital addition since. For depreciable property, the relevant figure is the undepreciated capital cost from the corporation's tax returns, and the gap between UCC and original cost is potential recapture, which is taxed as ordinary income if the election is set wrong.

Owners are often surprised by how far back this goes. A building bought fifteen years ago, renovated twice, with capital cost allowance claimed in some years and skipped in others, has a tax history that lives across fifteen T2 returns. We reconstruct it from the returns and supporting schedules when the source documents are thin, but reconstruction takes time, which is one more reason to start before the transfer, not after.

Value evidence: fair market value has to be defended, not guessed

Fair market value is the ceiling on the elected amount and the number the CRA is most likely to challenge. For real estate, that means a current appraisal from a qualified appraiser, not a municipal assessment or a realtor's opinion of list price. For shares of a private company or for goodwill, it means a valuation, and the depth of that valuation should match the dollars at stake. If the transfer prices property below its real value, the rules can add the shortfall back as a taxable amount, and if consideration is set too high, other penalty mechanics apply, so value is not a number to round casually.

The legal agreement should also carry a price adjustment clause, which allows the consideration to be corrected if the CRA later concludes the value was different, without collapsing the whole transaction. The CRA respects those clauses when the original valuation was a genuine, documented attempt to get the number right, which is exactly why the appraisal file matters as much as the clause itself.

Goodwill deserves its own line. When a whole business moves, the election usually includes goodwill, and goodwill has no invoice behind it: its value is what a proper valuation says the business is worth beyond its identifiable assets. That one number touches the elected amount, the consideration shares and the paid-up capital math all at once, so we treat the goodwill valuation as a core record rather than a rounding exercise, and we make sure the transfer agreement allocates it explicitly.

Liabilities: the number that most often breaks a rollover

Debt assumed by the corporation counts as non-share consideration, and non-share consideration sets the floor on the elected amount. That single mechanic causes more rollover problems than any other. If a property has a tax cost of, say, a modest fraction of its current value, and the mortgage against it exceeds that tax cost, then the elected amount must rise to at least the assumed debt, and the difference between the elected amount and the tax cost is a gain that gets taxed now. The rollover still works, but it stops being fully tax-deferred, and owners who find this out after closing have very few options left.

So we need every liability attached to what is moving: mortgages and their current balances, equipment loans, operating lines secured against the assets, shareholder loans, and anything owed under leases. We also need to know what the lender thinks, because most security agreements require consent before the borrower's assets change corporate hands, and a technically perfect election does not cure a defaulted loan covenant.

Corporate records: paid-up capital, share terms and the paper that makes it real

The election is a tax form, but the transfer is a legal transaction, and it needs real legal documents: a purchase and sale or transfer agreement, directors' resolutions in both corporations, and consideration shares that actually exist, with terms set out in the articles. Those shares carry a tax attribute called paid-up capital, the amount that can later be returned to a shareholder without tax. The rollover rules deliberately grind the PUC of the consideration shares down toward the tax cost you rolled in, so the corporation cannot manufacture tax-free withdrawal room out of a deferral. To apply that grind correctly we need the stated capital history from the minute book, and if the minute book has not been maintained, fixing it becomes step one.

If what you are transferring is shares of one corporation into another, the same records are needed on both sides: the share register proving you own them, their subscription and cost history, and their own PUC. Share-for-share transfers into a holding company are the most common rollover we see, and they live or die on the quality of the share records.

The T2057 itself: signatures, deadline and who files what

The election is made jointly on Form T2057, signed by you as transferor and by an authorized officer of the corporation receiving the property; a transfer from a partnership uses Form T2058 instead. The deadline is easy to misjudge: the form is due by the earliest date on which any party to the election has to file a tax return for the year of the transfer, so a corporation with an off-calendar year-end can pull the deadline months ahead of your personal filing date. When a Section 85 election is required covers which transfers need the form at all, and if the date has already passed, a late-filed election is usually still fixable, at a price.

On timing, assembling the file almost always takes longer than drafting the election. Cost reconstruction waits on old records, appraisals take weeks, and lenders answer on their own schedule, so we work backwards from the earliest filing deadline and start the slowest items first. A transfer that closes early in the corporate year leaves months of comfortable runway; the same transfer discovered near the deadline becomes a rush file, and rush files are where numbers go into elections unsupported.

Six facts change what this preparation looks like for you:

• Whether the property is depreciable, because UCC and recapture enter the math.
• Whether debt against the property exceeds its tax cost, which forces gain into the open.
• Whether real estate is moving, which brings appraisals, land transfer tax analysis and lender consent.
• Whether you or a partnership is the transferor, which changes the form and the signers.
• The state of both minute books, since PUC and share terms come from them.
• How soon the earliest return deadline lands, which sets the real timetable.

This is the standing intake list we use as a corporate reorganization and tax planning CPA firm in Ontario. A rollover is defined-scope work, quoted in writing after a free 15-minute discovery call, and it usually runs alongside the structural design itself through our Corporate Restructuring practice, or alongside the incorporation of the receiving corporation when it does not exist yet. The full picture of how these elections fit into a reorganization is in our guide to Section 85 rollovers for business owners.

Source: CRA — Form T2057, Election on Disposition of Property by a Taxpayer to a Taxable Canadian Corporation.