Re: Canada Amalgamation [CWILSON-C.FID2144802]

Thanks, Teio - Geri is going to loop Brian and team so we can get these
questions resolved.

On Fri, Apr 4, 2025 at 11:17 AM Teio Senda <TSenda@cwilson.com> wrote:

> Hi Nina,
>
>
>
> I have only provided KPMG with certain corporate documents of the
> amalgamating entities so they can assess any tax impacts. I have not been
> working with KPMG on the questions below. I was under the impression based
> on the email below that your team was in direct contact with KPMG to work
> through these items? If not, I can forward this email thread to Brian and
> Austin to get their thoughts.
>
>
> Regards,
>
>
> Teio
>
>
>
> *From:* Nina Kani <nkani@thekey.com>
> *Sent:* Friday, April 4, 2025 11:14 AM
> *To:* Teio Senda <TSenda@cwilson.com>
> *Cc:* Tammi Franzese <tammi.franzese@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]
>
>
>
> Teio - FYI KPMG is not on these emails.  Are you working with someone at
> KPMG on these questions and if so, who are you working with?
>
>
>
> On Wed, Apr 2, 2025 at 11:04 AM Teio Senda <TSenda@cwilson.com> wrote:
>
> Hi Tammi,
>
>
>
> My comments are below in red.
>
>
> Regards,
>
>
> Teio
>
>
>
> *Teio*
>
>
>
> *Senda*
>
>
>
> *Partner*
>
> <http://www.cwilson.com/>
>
> Clark Wilson LLP
> 900‑885 West Georgia Street | Vancouver, BC | V6C 3H1 | Canada
>
> Tel: 604.891.7750
>
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> Email: TSenda@cwilson.com
>
> www.cwilson.com
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>
> Profile  <https://www.cwilson.com/people/Teio-Senda/>
>
>
>
> *Our firm operates from the traditional, ancestral, and unceded territory
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>
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> *From:* Tammi Franzese <tammi.franzese@thekey.com>
> *Sent:* Tuesday, April 1, 2025 12:42 PM
> *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:* Fwd: Canada Amalgamation
>
>
>
> [CAUTION: This email originated from outside of the organization. Do not
> click links or open attachments unless you recognize the sender and know
> the content is safe.]
>
> 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
>
>
>
> [image: Image removed by sender.] <http://www.thekey.com/>
>
>
>
>
>
> ---------- Forwarded message ---------
> From: *Germaine Daniels* <germaine.daniels@thekey.com>
> Date: Tue, Apr 1, 2025 at 1:51 PM
> Subject: Canada Amalgamation
> To: Tammi Franzese <tammi.franzese@thekey.com>, Legal <legal@thekey.com>
> Cc: Geraldine Nath <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.