On January 1, 2023, a newly-formed personal trust purchased shares of Opco from Dad, who owned them throughout the preceding two years. The trust sold the shares on June 30, 2023, to an unrelated person. The CRA found that the trust could meet the 24-month holding period test in paragraph 110.6(1) “qualified small business corporation share” (b), if the trust and Dad were related under the rule in subparagraph 110.6(14)(c)(ii). It didn’t matter that the trust had been in existence for only six months at the time of the sale to the unrelated person.
CRA technical interpretation 2016(sic)-0662951E5 (March 28, 2025) summarized in Tax Topics no 2737 (August 12, 2025)
In this regard, keep in mind that an individual appears not to be related to him- or herself for the purposes of subparagraph 110.6(14)(c)(ii). If Dad (the transferor) is also a beneficiary of the trust, then it appears he will not be considered to be related to the trust for the purposes of the QSBCS definition.
