[Verse 1]
When a business changes hands today
Two paths you need to know
Asset purchase or share purchase way
Different tax winds blow
Assets mean you buy the parts inside
Shares mean you own the whole
Each one has a different tax divide
Let me tell you how it rolls
[Chorus]
Asset or share, buyer beware
Tax consequences everywhere
Due diligence, find exposures there
Section twenty-two, receivables to share
Remember fifty-six point four
Non-compete payments at the door
Asset or share, prepare with care
Canadian tax law everywhere
[Verse 2]
Asset purchase means depreciation
Buyer gets a fresh new start
Seller pays on capital appreciation
But goodwill plays its part
Share purchase keeps the tax year going
Buyer inherits all the pain
Seller gets capital gains flowing
If the structure's not in vain
[Chorus]
Asset or share, buyer beware
Tax consequences everywhere
Due diligence, find exposures there
Section twenty-two, receivables to share
Remember fifty-six point four
Non-compete payments at the door
Asset or share, prepare with care
Canadian tax law everywhere
[Bridge]
Earnouts and contingent pay
Spread the tax across the way
When performance hits the mark
Additional tax will spark
Due diligence is the key
Find what liabilities you'll see
Hidden tax bombs waiting there
Better check with proper care
[Verse 3]
Section twenty-two election
For accounts receivable
Seller gets a deduction
Buyer's loss is credible
Fifty-six point four is clear
Non-compete income's here
Not a capital gain I fear
Regular income appears
[Chorus]
Asset or share, buyer beware
Tax consequences everywhere
Due diligence, find exposures there
Section twenty-two, receivables to share
Remember fifty-six point four
Non-compete payments at the door
Asset or share, prepare with care
Canadian tax law everywhere
[Outro]
When the deal is on the line
Read the tax code every time
Asset purchase, share purchase fine
But know where you draw the line