Eligible small business corporation shares

Eligibile small business corporation shares have the following characteristics:

  • They consist of common shares issued by the corporation to you, the investor.
  • The issuing corporation must be an eligible small business corporation at the time the shares were issued.
  • The total carrying value of the assets of the corporation (that is, the amount at which the assets of the corporation would be valued for the purpose of the corporation's balance sheet as of that time if it was prepared in accordance with generally accepted accounting principles used in Canada at that time, except that an asset of a corporation that is a share or debt issued by a related corporation is deemed to have a carrying value of nil) and related corporations cannot exceed $50 million immediately before, and immediately after, the share was issued.
  • While you hold the shares, the issuing corporation is an eligible active business corporation.

To be able to defer the capital gain, you must have held the eligible small business corporation shares for more than 185 days from the date you acquired them.

The replacement shares have to be acquired at any time in the year in which the disposition is made or within 120 days after the end of that year.


You acquire eligible small business corporation shares in October 2012 and dispose of them on June 9, 2020. You may acquire the replacement shares on or before April 30, 2021, which is within 120 days after the end of the tax year of the original disposition.

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