S
upporting
Y
our
P
ractice
4. TheCGE canbe claimed
multiple times over your lifetime;
however, the amount you can
claim is reduced for each claim
youmake. For example, if you
previously claimed$400,000of
your CGE, only $413,600
will remain to claim in2015.
Another factor that could reduce
your CGE limit is if youhave
claimed large investment losses
in thepast. Until these losses
areoffsetwith investment
income, such as dividends from
your PC, youwon’t be able to
use the full CGE. Ensuring your
past investment losses aredealt
with appropriately could take a
few years.
5. Multiplying theCGE–Each
familymemberwho is anequity
shareholder of your PCcanalso
beused to saveup to$201,000 in
taxeson the saleof your PC. To
do so,most of the tests that apply
toyouwouldapply to them.
Therefore, itmay take some time
toensureeach familymember
qualifies for their CGE. Only
equity shareholders, not dividend
shareholders,will benefit from
claiming theCGE.
6. Dentistswithmultiplepractices
andmore thanonePCmay
exhaust their CGEandhave to sell
assetsof onepracticeand shares
of theother, dependingonhow
muchCGE is available.
Toenhance thevalueof your practice
and its sellingprice, consider the
following factors:
– Review your lease agreements
Buyersmayhavedifficultiesobtaining
financing from thebank if your lease
isexpiring. Youwill need tohavea
lease term, including renewals, of at
least 7years andpreferably10years.
Ademolitionor relocationclause
mayalsonegativelyaffect thevalue
of yourpractice. Negotiatewithyour
landlord to includeadditional renewal
terms inyour leaseand removeany
demolitionor relocationclauses. This
will enhanceyourpractice’s value
andmake itmoreappealing to
buyers, unless youonlywish to sell
goodwill (i.enoequipment, etc.).
If youown thebuildingandwould
like to keep it, consider offeringa
“right of first refusal” or “building
purchaseoption.” Thisoptionwill
make thedealmore favourable for
thebuyer.
Someequipment leases contain
early terminationpenalties that
buyers areoftenunwilling toassume.
Thismay trigger penalties to the
seller. As a result, anequipment lease
couldnegativelyaffect thevalueof
your practice.
–Termination/Severance of
ExistingEmployees
If thepurchaser doesnotwant to
retain someof theexisting staff, you
shouldbeawareofwhobears
thecosts to terminateor sever the
existingemployees. This shouldbe
addressed in the sales agreement
toprevent thepossibilityof future
liabilities.
Consider obtainingemployment
contracts for all your staffas this
couldenhance thevalueof your
practicebyminimizing severance/
terminationcosts forpotential buyers.
– Patients andbillings
Appraisalsoften lookat the latest
3yearsof financial performance to
determine thevalueof apractice.
Youwillwant toensure that you
identifyandaddress anyareas
where thepracticemaybeunder-
performing. Herearea fewways to
enhance thevalueof your practice:
a) Review referred services.
Compare thework that is referred
outwithyour ownclinical skills
andexperience. Inyour clinical
judgement, is thereanywork that
couldbedone in-house instead?
This could increasepatient fees
fromyour existingpatient base
whileprovidingyour patients
withconvenient care.
b) Bringa specialist in.
For services
youcan’t perform in-house,
consider bringing ina specialist.
Patientswill benefit from the
convenienceof having their
treatment completedat one
location.
a
Theviewsexpressedarethoseoftheauthoranddonotnecessarilyreflect
theopinionsorofficialpoliciesoftheCanadianDentalAssociation.
