Qualified small business corporation shares

A share of a corporation will be considered to be a qualified small business corporation share if all the following conditions are met:

Generally, when a corporation has issued shares after June 13, 1988, either to you, to a partnership of which you are a member, or to a person related to you, a special situation exists. The CRA considers that, immediately before the shares were issued, an unrelated person owned them. As a result, to meet the holding-period requirement, the shares cannot have been owned by any person other than you, a partnership of which you are a member, or a person related to you for a 24-month period that begins after the shares were issued and that ends when you sold them.

However, this rule does not apply to shares issued in any of the following situations:

Capital gains deduction
If you have a capital gain when you sell qualified small business corporation shares, you may be eligible for the capital gains deduction.

Completing your Schedule 3

Report the disposition of qualified small business corporation shares on lines 10699 and 10700 of Schedule 3.


Do not report the following transactions in this section of Schedule 3:

  • the sale of other shares, such as publicly traded shares or shares of a foreign corporation
  • your losses when you sell any shares of small business corporations to a person with whom you deal at arm's length. For more information, see Allowable business investment loss (ABIL)

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