- Shares of a Canadian-controlled private corporation (an “Active Business Corporation”) that uses substantially all its assets in an active business carried on primarily in Canada. With proper structuring, this can include shares in a holding corporation that holds only shares in a qualifying active business corporation.
- Qualified Farm Property and Qualified Fishing Property (whether or not a corporation is involved).
The new $1 million limit for Qualified Farm Property and
Qualified Fishing Property will be fixed at $1 million (no inflation
adjustments) until such time as the capital gains exemption limit (currently
$813,600) for shares of an Active Business Corporation reaches $1 million
through inflation adjustments. Once that
occurs, the Active Business Corporation and Qualified Farm Property and
Qualified Fishing Property limits will march forward from that point on at the
same level (with annual inflation adjustments).
The capital gains exemption limits are lifetime limits
available to each individual resident in Canada. For this reason, it is an advantage for each
family member to hold an interest in an asset that might qualify for the
exemption on a sale. Such interests can
be held through a family trust so as to provide additional flexibility in
respect of capital gains exemption claims.
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The above article provides general commentary of an educational nature. It does not constitute advice for any specific person or any specific set of circumstances. Because circumstances vary, readers should consult professional advisers in order to obtain advice that is applicable to their specific circumstances.