Mr. Santaguida wishes to transfer his proprietorship to a corporation. The proprietorship does not have a balance in Class 14.1. However, you are recommending that he transfer goodwill at an elected value of $1. Why?

Question

Quizplus · Accepted Answer

Transferring goodwill at a value of $1 ensures that it is included in the election and also avoids it being considered a gift. While ITA 85(1) does require the transfer of eligible capital property at a minimum of $1, this applies to depreciable property (not goodwill) and is not the primary reason for transferring goodwill at a value of $1 in this scenario. The fair market value of the goodwill may not necessarily be $1 just because it is not carried on the balance sheet.

Mr Santaguida Wishes to Transfer His Proprietorship to a Corporation