Lifetime Capital Gains Exemption, part 2

by in Tax Advice Information and Updates
Lifetime Capital Gains Exemption, part 2

On our last blog, we discussed the current rates of the capital gains exemption.  This time we’ll focus on the definition of the qualified small business corporation shares and the qualified farm or fishing property.

Qualified Small Business Corporation Shares:  The following conditions must be met for a share of a corporation to be considered a qualified business corporation share:

1.    At the time of sale, it was a share of the capital stock of a small business corporation, and it was owned by you, your spouse or common-law partner, or a partnership of which you were a member;

2.    Throughout that part of the 24 months immediately before the share was disposed of, while the share was owned by you, a partnership of which you were a member, or a person related to you, it was a share of a Canadian-controlled private corporation and more than 50% of the fair market value of the assets of the corporation were:
o   used mainly in an active business carried on primarily in Canada by the Canadian-controlled private corporation, or by a related corporation;
o   certain shares or debts of connected corporations; or
o   a combination of these two types of assets; and

3.    Throughout the 24 months immediately before the share was disposed of, no one owned the share other than you, a partnership of which you were a member, or a person related to you.

Qualified farm or fishing property:  The qualified farm or fishing property is certain property that you or your spouse or common-law partner owns.  It is also certain property owned by a family-farm or fishing partnership in which you or your spouse or common-law partner holds an interest.

Qualified farm or fishing property includes:

1.    A share of the capital stock of a family-farm or fishing corporation that you or your spouse or common-law partner owns;
2.    An interest in a family-farm or fishing partnership that you or your spouse or common-law partner owns;
3.    Real property, such as land, buildings, and fishing vessels; and
4.    Eligible capital property, such as milk and egg quotas, or fishing licenses.

Source:  www.cra.gc.ca

 

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