Transferring digital assets into a Canadian company is a strategic move that can offer numerous benefits, including tax efficiency and asset protection. However, the process involves meticulous documentation to ensure compliance with Canadian tax laws. Understanding the specific requirements for this transfer is crucial for individuals looking to move their digital assets under a corporate umbrella.
The cornerstone of transferring digital assets into a company is the Section 85 rollover process. This tax-deferred transaction is facilitated through a Share Purchase Agreement, which meticulously documents the transfer of assets from an individual to the corporation.
This agreement specifies the digital assets being transferred, their original acquisition cost, and their fair market value at the time of transfer. It effectively outlines the exchange of digital assets for shares in the company, ensuring there's a clear and legal record of the ownership transfer.
The agreement serves as the primary document that demonstrates the move from personal ownership to corporate possession. It establishes a fair market value exchange, crucial for tax purposes and corporate records.
If your digital assets are held on centralised exchanges, setting up corporate accounts is a significant administrative step. This ensures that the assets are recognised as being owned by the corporation, not by an individual.
Different exchanges have varying requirements for setting up corporate accounts. Some may necessitate forming a federal company or a provincial company outside Ontario, depending on their policies.
Establishing a corporate account on exchanges where your assets are held solidifies the corporate ownership of the assets. It's an essential step for maintaining the integrity of the transfer and ensuring that all assets are accounted for under the company's name.
Moving digital assets into a Canadian company involves more than just the physical transfer of assets. It requires a structured approach with detailed documentation, primarily through a Share Purchase Agreement as part of the Section 85 rollover process. Additionally, administrative steps like setting up corporate accounts on exchanges where assets are held play a crucial role in completing the transfer. By adhering to these requirements, individuals can successfully transition their digital assets into a corporate structure, leveraging the benefits of corporate ownership while complying with Canadian tax laws.
