This paper has three main components. First, it discusses the purpose of a tax-deferred share exchange and introduces some fundamental concepts for planning and implementing a share exchange. Second, it contains a high-level discussion of the technical requirements and mechanics of section 51 of the Income Tax Act. Third, it reviews some practical issues that arise in planning or documenting a section 51 share exchange.

This paper also includes a set of example documents for the implementation of a basic section 51 exchange of common shares for preferred shares by an individual shareholder.

This paper is part of a collection presented at LESA’s Tax Law for Corporate/Commercial Transactions program in Calgary on October 17, 2019 and in Edmonton on October 28, 2019.