An individual who had been the sole shareholder of corporation, whose shares otherwise would have qualified as qualified small business corporation shares (QSBCS), held those shares for a period of three years and then sold them to a personal trust whose only beneficiaries were his two children. Six months after that, the trust disposed of the shares to an unrelated third party.
CRA indicated that the mere fact that the trust had not been in existence for 24 months at the time of such disposition would not prevent the shares from qualifying as QSBCS. However, in order to meet the 24-month holding period requirement set out in para. (b) of the QSBCS definition, the trust and the person from whom it acquired the shares (the individual) were required to be related under s. 110.6(14)(c)(ii), i.e., at the time of the disposition, all of the beneficiaries (other than registered charities) of the trust were required to be related to the individual.