Capital Gains Splitting Still Possible

The new income-splitting restrictions still allow for the splitting of capital gains among family members – as long as the shares being sold are shares of active business corporations or family farm/fishing corporations.

This allows each family member to claim his or her capital gains exemption on the sale of part of the shares. This is most easily accomplished if the shares are held inside a discretionary trust.

While this allows for increased access to the capital gains exemption, it is not necessary that a capital gains exemption claim be made. As long as the shares would qualify for the exemption if there were no exemption limit, the capital gain can be split among family members (even if each family member has maxed out on his or her capital gains exemption limit).

If the shares are not shares of an active business corporation or a family farm/fishing corporation, however, any splitting of capital gains will have to rely on other exceptions to the income-splitting restrictions.

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