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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4527
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Scenario is: Shareholder A has 10% ownership in company. He

Customer Question

Scenario is:
Shareholder A has 10% ownership in company. He has 2500 voting 7500 non voting shares. Shares held since 2012
His ownership will increase to 13% in two weeks by way of shareholder B disposing of his shares.
Shareholder A would like to move all his shares to a holdco, then sell all shares in approx 3 months, all in hope of been eligible for capital gain exemption.
To do this, Company is planning on reclassifying shares by means of section 86, so shareholder A will have 13% of the same class of share.
Would Shareholder be able to sell his shares in 3 months and be eligible for capital gain exception, or would he need to wait 24 months before selling?
Submitted: 5 months ago.
Category: Finance
Customer: replied 5 months ago.
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Expert:  Rakhi Vasavada replied 5 months ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Person A will HAVE TO wait for 24 months in order to be eligible. Please refer the following resources. They are self explanatory and greatly informative.

http://www.cba.org/cba/cle/pdf/tax10_templeton_paper.pdf

http://www.cch.ca/newsletters/TaxAccounting/April2008/

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 5 months ago.
even if person A owned the shares 24 month prior to the section 86, person A would have to wait 24 months to be eligible for capital gain exception?
Expert:  Rakhi Vasavada replied 5 months ago.

Dear Friend,

Hello and welcome again.

Yes, that would be correct to understand.

Warm Regards,