In year 1 Father purchased Opco, in year 5 he transferred his shares equally to Child 1 who actively explanted the farming business of Opco along with Father (including after his death in Year 15), and to Child 2 who did not so participate. In Year 18 Child 2 transferred his or her shares to a holding company (Holdco), and in Year 20, wishes to transfer the shares of Holdco to a son. At all relevant times the assets of Opco were used in its farming business.
In finding that the shares of Holdco were shares of the capital stock of a family farm corporation, CRA stated (TaxInterpretations translation):
[T]he use of property by Father does not have to coincide with the ownership of the shares.
...Father used the property of Opco in carrying on a farming business in Canada in which he was actively engaged on a regular and continuous basis for 15 years out of a period of 21 years. We are therefore of the view that the property of Opco was used principally in the course of carrying on a farming business by an eligible person.