--- title: "Section 85 Rollover Explained: Move Assets In Tax-Deferred" url: https://www.everstonecpa.com/blog/section-85-rollover-explained description: "A section 85 rollover moves assets into a corporation without triggering tax, if the T2057 is filed on time and the elected amount chosen well. See how." type: guide updated: 2026-10-08 summary: "A section 85 rollover lets a business owner transfer property into a Canadian corporation without triggering an immediate tax bill on the accrued gain. The transferor and the corporation jointly elect on Form T2057 and agree on a transfer price. It is a technical election that needs professional advice before it is filed." faq_count: 6 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) Section 85 Rollovers Explained: Moving Assets Into a Corporation Advisory # Section 85 rollovers: *moving assets into a corporation* By EverStone CPA · Updated September 2026 · 8 min read **Quick answer:** A section 85 rollover lets a business owner transfer property into a Canadian corporation without triggering an immediate tax bill on the accrued gain. The transferor and the corporation jointly elect on Form T2057 and agree on a transfer price. It is a technical election that needs professional advice before it is filed. **Moving assets into a corporation?** We plan the transfer, prepare and file the T2057 and value the shares, at a fee quoted in writing before we start. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=planning#enquiry-form) The gain is deferred into the shares, not erased. **Rather have a CPA handle this?** A CPA at EverStone replies with a straight answer and a fixed fee for your situation. [Get My Fixed Quote →](https://www.everstonecpa.com/book-online?service=planning#enquiry-form) ## Key takeaways - A rollover under section 85 lets property move into a corporation at an agreed amount instead of at fair market value. - The transferor and the corporation file a joint election, Form T2057, to make it work. - The consideration coming back has to include shares of the corporation. - Non-share consideration (“boot”) above the elected amount generally creates an immediate income inclusion. - Valuation, corporate-law steps and the election deadline all have to line up. This is not a do-it-yourself transaction. For tax, most property transfers happen at fair market value, even between closely connected people. So moving an appreciated asset — a building, goodwill, equipment or a whole unincorporated business — into a corporation would tax a gain that produced no cash. Section 85 of the *Income Tax Act* is the relief. ## What a section 85 rollover actually does Section 85 lets a taxpayer and a taxable Canadian corporation **jointly elect** to transfer eligible property at an agreed amount instead of fair market value, so the corporation’s cost equals the transferor’s proceeds. The gain is deferred, not eliminated: it sits in the shares received and the corporation’s lower cost base. Work out your own date with the [T2057 deadline calculator](https://www.everstonecpa.com/forms/t2057#deadline-checker). The CRA form used for the election under subsection 85(1) is [Form T2057, Election on Disposition of Property by a Taxpayer to a Taxable Canadian Corporation](https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2057.html). **Moving a business or assets into a corporation?** We prepare the T2057 election, set the agreed amounts and file it on time, with the fee quoted in writing before any work starts. See [the T2057 deadline checker](https://www.everstonecpa.com/forms/t2057), or [get a fixed quote](https://www.everstonecpa.com/book-online?service=planning#enquiry-form). [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=planning#enquiry-form) ## Not everything qualifies The rules define eligible property. Most capital property and business inventory qualify; real property held as inventory is a notable exclusion. Cash needs no rollover, having no accrued gain. Sort each asset before drafting the election, because one ineligible asset in a bulk transfer can bring an unexpected tax bill. **Fair market value still matters.** Even though the transfer happens at an elected amount, fair market value has to be supported. It sets the ceiling on the elected amount, drives the value of the shares issued back, and is what the CRA would test on review. ## The elected amount is the whole exercise The agreed price is not a free choice. Broadly, it cannot fall below the tax cost of the property (with adjustments by property type) or exceed fair market value. Within that range it is chosen deliberately. Electing at tax cost defers the whole gain; electing higher realizes part of it, sometimes useful to use up losses or make room for the [lifetime capital gains exemption](https://www.everstonecpa.com/blog/lifetime-capital-gains-exemption-canada-small-business) on a future sale. ## Shares, “boot” and what comes back The corporation must give back shares as part of the consideration; that is what makes the election available. It can also give non-share consideration — cash, a promissory note or assumed debt — called “boot.” Both parties sign the election on form T2057. See [what form T2057 requires and when it is due](https://www.everstonecpa.com/forms/t2057). Boot is useful because it can be drawn down later without a dividend. But if it exceeds the elected amount, the excess generally produces an immediate income inclusion, defeating the rollover. Boot is one of the most common things corrected after the fact. ## Where owners typically see one - **Incorporating an existing business.** A sole proprietor with real accrued value — goodwill, equipment, a client list — usually cannot simply start a corporation and carry on. See our comparison of [incorporating versus staying a sole proprietor](https://www.everstonecpa.com/blog/incorporate-vs-sole-proprietor-bc). - **Inserting a holding company.** Shares of an operating company can be rolled into a new [holding company](https://www.everstonecpa.com/blog/holding-company-canada-when-it-makes-sense) without triggering tax on the accrued share value. - **Estate planning.** A rollover is often one step inside a larger reorganization such as an [estate freeze](https://www.everstonecpa.com/blog/estate-freeze-canada-small-business). - **Pre-sale reorganizations.** Moving non-business assets out of an operating company before a share sale so the shares can qualify for the exemption. ## Filing, timing and the things that go wrong The election deadline is tied to the parties’ tax returns; late filing is allowed only in limited cases and carries a penalty. The corporate-law steps must be done properly too: share subscriptions, directors’ resolutions, and a price-adjustment clause so the numbers can be corrected if the CRA disputes value. GST/HST and provincial property transfer taxes follow their own rules, separate from the income tax rollover. The failures we see are rarely about the concept. They are about execution: an elected amount outside the permitted range, boot that exceeds it, a missing share, an unsupported valuation, or a transaction papered months after it supposedly happened. ## The bottom line A section 85 rollover is useful, and one of the more technical elections in Canadian tax. No template version is safe. If a transfer into a corporation is on the table, work through it with a CPA and a corporate lawyer on your facts before anything is signed. We have that conversation with owners as part of [business advisory](https://www.everstonecpa.com/advisory-services) work, before the transaction, not after. Sources - [Canada Revenue Agency — Form T2057, Election on Disposition of Property by a Taxpayer to a Taxable Canadian Corporation](https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2057.html) - [Canada Revenue Agency — Corporation income tax](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations.html) - [Canada Revenue Agency — Forms and publications](https://www.canada.ca/en/revenue-agency/services/forms-publications.html) This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique, so please [speak with a CPA](https://www.everstonecpa.com/book-online?service=planning#enquiry-form) before acting on anything here. About this article **EverStone CPA** Prepared and reviewed by a CPA at EverStone CPA, serving businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online?service=planning#enquiry-form) ### Keep reading [When a holding company makes sense →](https://www.everstonecpa.com/blog/holding-company-canada-when-it-makes-sense) [Estate freezes in Canada →](https://www.everstonecpa.com/blog/estate-freeze-canada-small-business) [Incorporate or stay a sole proprietor? →](https://www.everstonecpa.com/blog/incorporate-vs-sole-proprietor-bc) FAQ ## Frequently asked questions **What is a section 85 rollover?** The rollover is an election under section 85 of the Income Tax Act that lets a taxpayer transfer eligible property to a taxable Canadian corporation at an agreed amount rather than at fair market value. The accrued gain is deferred rather than eliminated — it carries forward into the shares received and into the corporation’s cost of the asset. **What form is used for a section 85 rollover?** Form T2057, Election on Disposition of Property by a Taxpayer to a Taxable Canadian Corporation, is the CRA form for an election under subsection 85(1). It is a joint election, so both the transferor and the corporation are parties to it and both are bound by the elected amount. **Can I choose any transfer price I want?** No. The elected amount has a statutory floor and ceiling. Broadly it cannot be below the tax cost of the property, with adjustments that depend on the type of property, and it cannot exceed fair market value. Within that range the number is a planning decision, not an arbitrary one. **What is “boot” in a section 85 transfer?** Boot is the non-share consideration the corporation gives back — cash, a promissory note, or debt it assumes. It is useful because it can usually be drawn down later without a dividend. If the boot exceeds the elected amount, though, the excess generally creates an immediate income inclusion. **Does every asset qualify for a rollover?** No. The rules define eligible property. Most capital property and most business inventory qualify, but there are exclusions — real property held as inventory being a well-known one. Each asset in a proposed transfer needs to be sorted before the election is drafted. **Can I do a section 85 rollover myself?** Not realistically. It combines a valuation, corporate-law steps, a deadline-bound election, and GST/HST and provincial transfer taxes. Have a CPA and a lawyer work on your facts before anything is signed. ## Thinking about moving assets into a corporation? Tell us what you are transferring and roughly what it is worth. A CPA replies by email within one business day with the steps, the filing deadline and a fixed fee. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=planning#enquiry-form)[Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) ## Have a question about this? Ask free through [the quick-question form](https://www.everstonecpa.com/quick-question); a CPA replies by email within one business day. A paid 45-minute **Advice Call** with a CPA costs $225 plus GST, booked by email with a secure payment link, and is credited to your first invoice if you become a client within 60 days. Want us to take it on? [Send an enquiry](https://www.everstonecpa.com/book-online?service=planning#enquiry-form). [Ask a Free Question](https://www.everstonecpa.com/quick-question) [Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) Email info@everstonecpa.com ★★★★★ “…have been completing my bookkeeping, taxes and financials for the last 2 years and they have been amazing. Thank you!” R. H. · Google review **Run your own numbers with the free calculators:** [work out your instalments](https://www.everstonecpa.com/tax-instalment-calculator) · [run the salary-or-dividends numbers](https://www.everstonecpa.com/salary-vs-dividends-calculator) · [when the T2 has to be filed](https://www.everstonecpa.com/t2-deadline-calculator) [← Salary vs dividends: how to pay yourself from your corporation](https://www.everstonecpa.com/blog/salary-vs-dividends-2026) [Selling a rental property: recapture, capital gain and the order the numbers work in →](https://www.everstonecpa.com/blog/selling-a-rental-property-canada-tax) --- Source: https://www.everstonecpa.com/blog/section-85-rollover-explained Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online