RE: Canada Amalgamation [CWILSON-C.FID2144802]

Brian Rubinstein and Austin Johanson are my contacts at KPMG.

From: Tammi Franzese <tammi.franzese@thekey.com>
Sent: Friday, April 4, 2025 11:10 AM
To: Teio Senda <TSenda@cwilson.com>
Cc: Nina Kani <nkani@thekey.com>; Steve Koyanagi <skoyanagi@thekey.com>; Geraldine Nath <geraldine.nath@thekey.com>; Germaine Daniels <germaine.daniels@thekey.com>; Timothy Thomas <tt@thekey.com>
Subject: Re: Canada Amalgamation [CWILSON-C.FID2144802]


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Hi Teio,

Who have you been working with at KPMG on this amalgamation?

Thank you,

Tammi Franzese

Senior Corporate Paralegal | TheKey

Mobile: 123.456.7890


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On Wed, Apr 2, 2025 at 2:59 PM Tammi Franzese <tammi.franzese@thekey.com<mailto:tammi.franzese@thekey.com>> wrote:
Hi Teio,

Thank you for your quick response. We'll review and let you know if we have any questions.

Sincerely,


Tammi Franzese

Senior Corporate Paralegal | TheKey

Mobile: 123.456.7890


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On Wed, Apr 2, 2025 at 2:04 PM Teio Senda <TSenda@cwilson.com<mailto:TSenda@cwilson.com>> wrote:
Hi Tammi,

My comments are below in red.

Regards,

Teio


Teio



Senda



Partner

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From: Tammi Franzese <tammi.franzese@thekey.com<mailto:tammi.franzese@thekey.com>>
Sent: Tuesday, April 1, 2025 12:42 PM
To: Teio Senda <TSenda@cwilson.com<mailto:TSenda@cwilson.com>>
Cc: Nina Kani <nkani@thekey.com<mailto:nkani@thekey.com>>; Steve Koyanagi <skoyanagi@thekey.com<mailto:skoyanagi@thekey.com>>; Geraldine Nath <geraldine.nath@thekey.com<mailto:geraldine.nath@thekey.com>>; Germaine Daniels <germaine.daniels@thekey.com<mailto:germaine.daniels@thekey.com>>; Timothy Thomas <tt@thekey.com<mailto:tt@thekey.com>>
Subject: Fwd: Canada Amalgamation


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Hi Teio,

Will you please review the email from our payroll director and let us know your thoughts?

Thank you,

Tammi Franzese

Senior Corporate Paralegal | TheKey

Mobile: 123.456.7890


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---------- Forwarded message ---------
From: Germaine Daniels <germaine.daniels@thekey.com<mailto:germaine.daniels@thekey.com>>
Date: Tue, Apr 1, 2025 at 1:51 PM
Subject: Canada Amalgamation
To: Tammi Franzese <tammi.franzese@thekey.com<mailto:tammi.franzese@thekey.com>>, Legal <legal@thekey.com<mailto:legal@thekey.com>>
Cc: Geraldine Nath <geraldine.nath@thekey.com<mailto:geraldine.nath@thekey.com>>


Hi Tammi,

Following up on my conversation yesterday with the Canada Revenue Agency (CRA), they advised that each entity involved in the amalgamation needs to close their existing CRA accounts and obtain a new CRA account and name for TheKey Care, LTD. [CW NTD: I will let KPMG comment. It may be true that a new “CRA account” must be obtained although when it comes to the business number the CRA allows for the amalgamated entity to select a business number of one of the pre-amalgamated entities to continue and apply to the amalgamated entity. I recommend KPMG assist you with this process. I understand the intent was to preserve one of the existing business numbers] Additionally, to comply with provincial tax regulations, Legal will need to ensure that all current locations are properly set up with the CRA, EHT (where applicable), and updated WSIB/WCB. [CW NTD: We have had no involvement in EH or WSIB/WCB as these are operational matters. We typically defer to the operational team to advise on the CRA/EHT/WSIB accounts as they are closer to them than we are. That said, we can take a look, although will need more clarity as to what you are looking for] As a result of this mid-year amalgamation, employees will receive two T4s—one for the existing entity and one for the new entity—which will require certain statutory taxes for employees and employers to restart. The CRA does not recommend moving existing employees to Orofresh and then to TheKey Care, LTD, as this would lead to employees receiving three T4s for 2025, potentially creating substantial tax implications for the employer. [CW NTD: I would agree with this. There should be no need to actually transfer employees. The amalgamation naturally results in every employee being employed by the amalgamated entity]

Below are comments we received from KPMG regarding this matter:

The amalgamation of various Canadian corporations into one entity mid-year will necessitate several considerations for Canadian federal and provincial payroll taxes. I have provided high-level comments for your consideration. Please note that you will need to consider the locations of the employees to determine which provinces the provincial registrations take place, as you cannot remit to another jurisdiction if your employees reside and work in a specific province (i.e., you cannot remit EHT to the BC Ministry for the Ontario-based employees of Arya Healthy Living).

Employer Health Tax (“EHT”)/Health Tax CW NTD: I will defer to KPMG as this is a tax matter

* Within 40 days of the amalgamation, all registered entities must notify applicable employer health tax department(s) and submit required information, including filing the final EHT/Health Tax Annual returns and paying any outstanding tax amounts.
* The Ministry will issue a new EHT/health tax account number for the newly merged entity. There should be no monetary implications from an EHT/Health Tax remittance perspective, depending on the amalgamation method. This is because the tax rate is a flat rate without annual maximums under the various provincial jurisdictions. The tax is imposed on employees’ remuneration under each account.
* Whether the ongoing entity remits health tax premiums for employees of the prior entities is merely an administrative consideration as opposed to financial.
* By merging the various accounts, we understand that the overall total remittances for all entities will be less compared to the past when filings were remitted separately under each entity.
* Based on the points mentioned above, it appears necessary to notify the respective Ministries with the appropriate legal documentations and authorizations referencing details on the amalgamations.

Workplace Compensation Board (”WSIB/WCB”)

* All entities must notify WCB of the merger within 10 days of the transaction, as they are currently registered for WSIB/WCB, and this is considered a material event. Generally, all compulsory covered businesses must notify WSIB/WCB and complete all proper information, including documents relating to the merger and a statement of the total wages earned during the year by all workers up to the date of the amalgamation if the business is registered. The predecessor entities will be required to file returns, as premiums are payable up to the date of the merger.
* Generally, when an amalgamated corporation is created out of two or more distinct corporations, the amalgamated corporation is subject to all the liabilities and debts of the predecessor entities. Therefore, the successor entity would be liable for all the WSIB/WCB assessments/reassessments of its predecessor companies. [CW NTD: Correct]
* Regardless of whether a new account is established, the WSIB/WCB generally transfers the predecessor accounts' experience rating to the amalgamated entity.
* There may be limited financial implications for employees who earn more than the annual maximums, as the maximum assessable amount applies to employees’ assessable earnings under each account from which they are paid. For example, the maximum assessable earnings amount to include for each worker in Ontario is $117,000 in 2025. This amount applies to all employees’ earnings under each WSIB/WCB account number. Please note that WCB rules for other provinces are similar to those of the Ontario WSIB as it relates to the amalgamation of payroll accounts.
* It is important to note that the maximum assessable earnings will not be prorated on the employees that will be paid under the prior accounts before the merger, and premiums may exceed the annual limits on a per-employee basis due to payments under multiple accounts resulting from the merger.
* To calculate the financial impact for the employees, detailed WSIB/WCB payments to the date of the transaction for each employee under the registered account numbers would be required.
* Based on the points above, it appears that amalgamating the accounts may be beneficial for administrative reasons. Notifying the respective workers' compensation boards will require the appropriate legal documentations and authorizations. [CW NTD: As a starting point, I recommend that you reach out to the Employers’ Advisors Office (https://www2.gov.bc.ca/gov/content/employment-business/employers/employers-advisers-office), explain the proposed amalgamation, and they can then advise on the WCB notification process. This is specific to BC but it will give your operational team of the general sense of the process in BC, which should be similar in the other provinces. Ontario has a similar program to assist. We generally are not involved in this as it is operational and WCB will likely have questions on matters like the number of employees and payroll]


Location
Current Subsidiary
Subsidiary
Location
Current CRA
(New) CRA
Current EHT Account Number
(New) EHT Account Number
Current WSIB/WCB Account Number
(New) WSIB/WCB Account Number
Vancouver
Orofresh Enterprises Inc.
Merging >
TheKey Care, LTD
Vancouver
83637 0056 RT0001
EHT-1466-6095
848256
Calgary
Alberta LTD
Merging >
TheKey Care, LTD
Calgary
717980320RP0001
N/A
N/A
8405317
Toronto
SJD Care Services, Inc.
Merging >
TheKey Care, LTD
Toronto
812319374RP0001
812319374TE0001
5562192
Montreal
Home Care Assistance (Montreal) Inc.
Merging >
TheKey Care, LTD
Montreal
853424380RP0001
N/A
N/A
N/A
N/A
Oakville
Arya Healthy Living Oakville Inc.
Merging >
TheKey Care, LTD
Oakville
767800113TE0001
767800113TE0001
7519403
Winnipeg
Prairie Senior Care Inc.
Merging >
TheKey Care, LTD
Winnipeg
71984 3922 RP0001
71984 3922 RP0001
2510527
Waterloo
Arya Healthy Living Inc.
N/A
Arya Healthy Living Inc.
Waterloo
824550594TE0001
N/A
824550594TE0001
N/A
6079167
N/A

Please let us know how we are to proceed.

Regards,



Germaine Daniels

Director Payroll | TheKey

Email: germaine.daniels@thekey.com<mailto:germaine.daniels@thekey.com>

Mobile: 562.784.1800


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