Sale of shares from son to father

My client has a CCPC. He wants to sell his shares to his father. Can he benefit from LCGE. Kindly consider Bill C-208 when replying. Thanks

Your client should be able to sell shares of his CCPC to his father. Whether or not he can benefit from the LCGE would depend on whether the shares are contaminated with too many passive assets (ie must meet the test to be Qualifying Small Business Shares) but this would be the case regardless of who the client sold the shares to.

Bill C-208 is only a consideration if your client’s father plans on using a holding company to take possession of the shares. He was always free to take ownership of the shares in his personal name without it affecting the son’s ability to access the LCGE. Bill C-208 makes it possible to take ownership through a related Holdco provided some conditions are met. I believe they intend to tighten up some of the conditions this November as they left some gaping holes in the legislation.

If the shares are not farm or fishing shares the transfer must happen at Fair Market Value.