X and Y for at least 24 months held equal interests in a partnership ("SNC") that owned, during that 24-month period, all of the shares of ABC Inc. (a CCPC carrying on an active business that at all relevant times satisfied the 90% test). SNC was wound-up under s. 98(3) and, within 24 months, the shares of ABC Inc. were sold to unrelated third parties. Does such sale qualify as a disposition of qualified small business corporation shares ("QSBCS")?
After noting that under s. 110.6(14)(d), for QSBCS purposes “a partnership shall be deemed to be related to a person for any period throughout which the person was a member of the partnership,” CRA stated, in finding that para. (b) of the QSBCS definition was satisfied:
[I]n order for the shares of ABC Inc. to qualify as QSBCS, it is necessary that, during the months in which the shares of ABC Inc. were not owned by X and Y, they were the property of a person or partnership that was related, during those months, to X and Y.
In light of the facts … throughout the 24-month period preceding the disposition of the ABC Inc. shares by X and Y, they were not owned by anyone other than a person or corporation related to them.