Nicolas Godbout, fiscaliste et planificateur financier, M. Fisc., Pl. Fin

Claim the capital gains exemption without delay

Canadian tax  —   —  Share


Hi Nicolas,

You told me about setting up a new company for the turnover of my customers for the imminent sale to my partner. My partner would like to know how it works, because I told him there is no two-year criteria and so on for cleaning. If you could send me some information, it might reassure him. I plan to sell my customers to him by the end of December this year.


Mr G.

Hello Mr. G.,

Here’s a quick recap of our last discussion on this topic:

  1. For customers who are already in the company xxx Qc Inc., it will not be possible to purify the company and use the exemption for capital gains (because of contaminating assets).
  2. For the customers who are in your name, it is possible to roll them into a new company which will be immediately sold to your associate. There are provisions in the law that make it possible to avoid the 2-year waiting period for being entitled to this deduction. As the new company has no contaminating assets and that it is not controlled by XXX Qc inc, the new company then satisfies the exemption test. You will then be entitled to a gain of $883,384 (for 2020, will be indexed in 2021) without tax. Note that the AMT (Alternative Minimum Tax) may still apply.

I hope this will reassure your partner. Let me know if you need more details on this.

Nicolas Godbout, M Fisc., Pl. Fin