In acquiring the business of a Canadian income fund, it is essential that a foreign buyer understand the structure through which the fund owns the business, says Elinore Richardson and Larissa Tkachenko, both partners in the Toronto office of Borden Ladner Gervais LLP who specialize in international taxation.

In terms of buyer considerations, say Richardson and Tkachenko, two principal Canadian considerations exist. 'The first is the specific assets or securities that the buyer will acquire. The second is how the intermediate structure will be collapsed after the acquisition has been completed. Both must take into account the expectations of the fund’s unitholders.'

In many respects, the transaction resembles the takeover of a public corporation and tax due diligence – which may disclose any number of issues and opportunities for the buyer – is critical prior to the signing of the acquisition agreement.