The individual transfers all of the assets of a business carried on by the individual, including the leasehold interest in a building, to a newly-incorporated corporation ("Corporation A") under s. 85(1). The value of the building would represent more than 10% of the assets used by the taxpayer in the carrying on of the business. Is the “all or substantially all” test in s. 110.6(14)(f)(ii)(A) satisfied? CRA responded:
Generally, where 90% or more of the assets of a business are transferred to a corporation, we consider that all or substantially all of the assets of the business are transferred to the corporation. In the situation you described, it is necessary to determine whether the individual transferred all or substantially all of the assets that belonged to the individual and that were used in the business that the individual was actively carrying on. In our view, it would appear that the individual could benefit from the capital gains deduction applicable to the qualified small business corporation shares he would receive from Corporation A.