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  • Jul 19th, 2016 6:34 am
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[OP]
Newbie
Nov 30, 2015
76 posts
3 upvotes
Vancouver, BC

Capital gains exemption

Hi all, I heard about the capital gains exemption on sale of company shares.
If I sell my shares now to my kids at the market value, can I claim the exemption and not pay any tax?
Does anyone know?
6 replies
Member
May 14, 2013
384 posts
348 upvotes
RFD
dk1998 wrote:
Jul 17th, 2016 1:34 am
Hi all, I heard about the capital gains exemption on sale of company shares.
If I sell my shares now to my kids at the market value, can I claim the exemption and not pay any tax?
Does anyone know?
Are you referring to small business shares? Or publicly traded shares? The treatment is different, but the short answer is no.

http://www.taxplanningguide.ca/tax-plan ... y-members/
Deal Addict
Jun 12, 2015
2081 posts
651 upvotes
Ontario
dk1998 wrote:
Jul 17th, 2016 2:45 am
I'm referring to corporation shares (private). Can you explain briefly?
You can. I don't remember the specific process but I recall briefly you transfer share to kids, use exemption on those gains and you get redeemable preferred shares.

It allows you to freeze the fmv of your shares and any future movement of the shares goes to the kids.

But I do know to use the exemption you need to meet very specific criteria like, 90% of fmv of company asset was used for active business income, over 50% of it was used for business in Canada for 2 years and you held these shares for at least 2 years.
Member
Dec 23, 2007
312 posts
48 upvotes
Hamilton
Dynasty12345 wrote:
Jul 17th, 2016 11:12 am
You can. I don't remember the specific process but I recall briefly you transfer share to kids, use exemption on those gains and you get redeemable preferred shares.

It allows you to freeze the fmv of your shares and any future movement of the shares goes to the kids.

But I do know to use the exemption you need to meet very specific criteria like, 90% of fmv of company asset was used for active business income, over 50% of it was used for business in Canada for 2 years and you held these shares for at least 2 years.
Thanks for the info. +1
[OP]
Newbie
Nov 30, 2015
76 posts
3 upvotes
Vancouver, BC
Dynasty12345 wrote:
Jul 17th, 2016 11:12 am
You can. I don't remember the specific process but I recall briefly you transfer share to kids, use exemption on those gains and you get redeemable preferred shares.

It allows you to freeze the fmv of your shares and any future movement of the shares goes to the kids.

But I do know to use the exemption you need to meet very specific criteria like, 90% of fmv of company asset was used for active business income, over 50% of it was used for business in Canada for 2 years and you held these shares for at least 2 years.
That's great to know. I don't have to sell my shares to 3rd party and still enjoy tax free capital gain.
Deal Guru
Aug 2, 2010
13204 posts
3416 upvotes
Here 'n There
Yeah but youll end up with money in your pocket selling it to a third-party. You won't selling it to your kids.

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