Open ProvincesLifetime Capital-Gains Exemption for Small-Business Shares
A sale does not qualify automatically. The lifetime capital-gains exemption has detailed share, holding-period, asset-use and limit tests that should be reviewed before a transaction.
Adapted from a guide first written for Quebec readers: passages specific to Quebec were removed. Rules in your province may differ.
Start with the facts that change the answer
Eligibility for qualified small-business corporation shares depends on corporate history and asset composition at specific times, as well as ownership and holding-period conditions. A company can fail a test because too much value is held in passive assets or because the required active-business use is not documented. The available exemption and capital-gains inclusion rules may also change by tax year.
Document your next step
Before signing a letter of intent or reorganizing, ask a tax lawyer or accountant to review the corporation’s balance sheets, share register, prior transactions and the relevant statutory tests. Preserve valuation evidence and corporate records. Do not rely on a headline exemption amount as if it were cash saved; calculate the actual tax effect and confirm the current CRA forms and reporting obligations.
Read the French guide →
Sources and limits
Source: CRA: capital gains deduction. This is a complex tax-planning area; statutory limits, qualification tests and tax treatment should be confirmed for the transaction year.
General information based on federal and national rules; provincial rules may differ. Confirm with the official body before acting.