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We found the following documents attached to this matter. Replace any file if you have a more recent version.
Instruction letter
Bennett_Tax_Instruction_Letter_Nov2025.pdf
Found in Clio
Minute book
Smith_Holdings_MinuteBook_2025.pdf
Found in Clio
Transaction form
Transaction_Form_2024-TAX-0847.pdf
Found in Clio
These documents were retrieved from Clio for Smith Holdings Inc., matter 2024-TAX-0847. The memo generator will cite specific pages and passages from each document.
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Parsing source documents and synthesising transaction steps…
Extracting document textInstruction letter · Minute book · Transaction form
Identifying transaction typeClassifying pipeline transaction
Mapping entities & relationshipsSmith Holdings · 1234567 Ontario Inc.
Generating transaction stepsCross-referencing all source documents
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Finalising memo documentFormatting and preparing for review
MSF Law — Confidential
Transaction Step Memo
Pipeline Transaction — Smith Holdings Inc.
This memo sets out the transaction steps required to complete the pipeline reorganization of Smith Holdings Inc. pursuant to the instruction letter dated November 14, 2025 from Bennett Tax Advisory. The transaction involves a s.85 rollover of common shares of Smith Holdings Inc. to a newly incorporated holding company (1234567 Ontario Inc.), followed by the redemption of preferred shares to extract retained earnings on a tax-deferred basis. All steps are to be completed effective December 31, 2025.
Transaction steps
1
Incorporate 1234567 Ontario Inc. under the OBCA[1]
Incorporate a new holding company (1234567 Ontario Inc.) under the Ontario Business Corporations Act. The articles of incorporation shall authorize an unlimited number of common shares and Class A redeemable retractable preferred shares. Robert Smith and Jennifer Smith shall be the initial directors and shareholders.
2
File s.85(1) election to roll common shares into Holdco[2]
Robert Smith and Jennifer Smith (the "Transferors") shall transfer their common shares of Smith Holdings Inc. to 1234567 Ontario Inc. by way of a s.85(1) rollover election. The agreed amount shall equal the adjusted cost base of the shares. In consideration, the Transferors shall receive Class A preferred shares of 1234567 Ontario Inc. with a redemption amount equal to the fair market value of the transferred property.
3
Update share register of Smith Holdings Inc.[3]
Following completion of the share transfer, update the share register of Smith Holdings Inc. to reflect that 1234567 Ontario Inc. is the registered holder of all issued and outstanding common shares. Cancel share certificates previously issued to Robert Smith and Jennifer Smith and issue a new certificate to 1234567 Ontario Inc.
4
Pass directors' resolutions approving the rollover and share issuance[4]
The directors of Smith Holdings Inc. shall pass a resolution approving the transfer of common shares pursuant to the s.85(1) election and authorizing officers to execute all related documents. A corresponding resolution shall be passed by the directors of 1234567 Ontario Inc. approving the issuance of Class A preferred shares to the Transferors.
5
Issue Class A preferred shares of 1234567 Ontario Inc. to Transferors[5]
Issue Class A redeemable retractable preferred shares of 1234567 Ontario Inc. to Robert Smith and Jennifer Smith as consideration for the s.85 rollover. The redemption amount per share shall equal the fair market value of the transferred common shares of Smith Holdings Inc. as at the effective date, as determined by a qualified valuator.
6
Declare and pay inter-corporate dividend from Opco to Holdco[6]
The directors of Smith Holdings Inc. shall declare an inter-corporate dividend payable to 1234567 Ontario Inc. as the registered holder of all common shares. The dividend shall be paid from retained earnings and received tax-free by 1234567 Ontario Inc. pursuant to the inter-corporate dividend deduction under s.112 of the ITA.
7
Redeem Class A preferred shares of 1234567 Ontario Inc.[7]
Following receipt of the inter-corporate dividend, 1234567 Ontario Inc. shall redeem the Class A preferred shares held by Robert Smith and Jennifer Smith at their stated redemption amount. The redemption proceeds shall be funded by the dividend received from Smith Holdings Inc. Any deemed dividend arising on redemption shall be offset by the capital loss on the preferred shares pursuant to the pipeline structure.
8
File T2057 elections with the CRA within the prescribed deadline[8]
Robert Smith, Jennifer Smith, and 1234567 Ontario Inc. shall jointly file the T2057 election form with the Canada Revenue Agency by the earliest of the filing due dates of the Transferors or Transferee. The agreed amount, description of transferred property, and FMV must be included. Retain copies of all election forms in the minute book.
9
Update minute books of both corporations[9]
Update the minute books of both Smith Holdings Inc. and 1234567 Ontario Inc. to reflect all resolutions passed, share transfers, and issuances completed in connection with the transaction. Insert all executed resolutions, share certificates, and transfer instruments in chronological order. Update share registers, officer and director registers, and annual returns as required.
Source citations
In production, each citation will be hyperlinked directly to the referenced page in the source document.
[1]
Instruction Letter (Bennett Tax Advisory) — p. 2
"We recommend incorporation of a new Holdco under the OBCA with authorized capital comprising unlimited common and Class A redeemable retractable preferred shares to facilitate the pipeline."
"We recommend incorporation of a new Holdco under the OBCA with authorized capital comprising unlimited common and Class A redeemable retractable preferred shares to facilitate the pipeline."
[2]
Instruction Letter (Bennett Tax Advisory) — p. 3–4
"The Smiths shall elect under s.85(1) to transfer their Opco common shares to Holdco at agreed amounts equal to the ACB of such shares, with preferred shares of Holdco issued as consideration at FMV."
"The Smiths shall elect under s.85(1) to transfer their Opco common shares to Holdco at agreed amounts equal to the ACB of such shares, with preferred shares of Holdco issued as consideration at FMV."
[3]
Minute Book (Smith Holdings Inc.) — p. 18 (Share Register)
"Current registered holders: Robert Smith — 500 common shares (Certificate #001); Jennifer Smith — 500 common shares (Certificate #002)."
"Current registered holders: Robert Smith — 500 common shares (Certificate #001); Jennifer Smith — 500 common shares (Certificate #002)."
[4]
Instruction Letter (Bennett Tax Advisory) — p. 4
"Appropriate corporate authorizations should be obtained from the boards of both Opco and Holdco prior to completion of any transfers or share issuances."
"Appropriate corporate authorizations should be obtained from the boards of both Opco and Holdco prior to completion of any transfers or share issuances."
[5]
Instruction Letter (Bennett Tax Advisory) — p. 4–5
"Holdco shall issue Class A preferred shares to each of the Transferors with a redemption amount per share equal to the FMV of the transferred Opco shares as determined by a qualified valuator."
"Holdco shall issue Class A preferred shares to each of the Transferors with a redemption amount per share equal to the FMV of the transferred Opco shares as determined by a qualified valuator."
[6]
Instruction Letter (Bennett Tax Advisory) — p. 5
"Opco shall declare and pay an inter-corporate dividend to Holdco in an amount equal to the accumulated retained earnings, which shall be deductible by Holdco under s.112 of the ITA."
"Opco shall declare and pay an inter-corporate dividend to Holdco in an amount equal to the accumulated retained earnings, which shall be deductible by Holdco under s.112 of the ITA."
[7]
Instruction Letter (Bennett Tax Advisory) — p. 6
"Following receipt of the inter-corporate dividend, Holdco shall redeem the Class A preferred shares at their stated redemption amount, completing the pipeline."
"Following receipt of the inter-corporate dividend, Holdco shall redeem the Class A preferred shares at their stated redemption amount, completing the pipeline."
[8]
Instruction Letter (Bennett Tax Advisory) — p. 7
"The T2057 joint election must be filed on or before the earliest filing due date of the Transferor or Transferee for the taxation year in which the transfer takes place."
"The T2057 joint election must be filed on or before the earliest filing due date of the Transferor or Transferee for the taxation year in which the transfer takes place."
[9]
Transaction Form — Matter 2024-TAX-0847
"Both Smith Holdings Inc. (OBCA) and 1234567 Ontario Inc. (OBCA) minute books to be updated upon completion of all transaction steps."
"Both Smith Holdings Inc. (OBCA) and 1234567 Ontario Inc. (OBCA) minute books to be updated upon completion of all transaction steps."
Pushed to Clio
The transaction step memo has been attached to matter 2024-TAX-0847 and the matter status has been updated.
Pushed to Clio — this is a prototype.
Pushed to Clio — this is a prototype.
Matter2024-TAX-0847
ClientSmith Holdings Inc.
DocumentSmith_Holdings_Pipeline_Memo_2025.docx
Matter statusMemo Complete
Synced at—