Excluded Amount

Amount that is the individual's income for the year from a property or the individual's taxable capital gain or profit for the year from the disposition of a property. The amount must meet the following conditions:

  • If the individual has not reached age 24 before the year, the amount is income from a property that the individual inherited from a parent. If the individual inherited the property from another person, the individual must be a full-time student, or be eligible for the disability tax credit, in the year in which the income must be reported.
  • The amount is income from a property that was transferred to the individual by his or her spouse or de facto spouse pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written separation agreement if, at that time, the individual and the spouse or de facto spouse were separated and living apart as a result of the breakdown of their marriage or de facto union.
  • The amount is a taxable capital gain resulting from the deemed disposition of the individual's capital property immediately before the individual's death.
  • The amount is a taxable capital gain (except a capital gain deemed to be a dividend) resulting from the disposition by the individual of property that is, at the time of the disposition, qualified farm or fishing property or qualified small business corporation shares.
  • If the individual reached age 17 before the year, the amount is not derived, directly or indirectly, from a related business of the individual or it is derived, directly or indirectly, from an excluded business of the individual.
  • If the individual reached age 17 but not age 24 before the year, the amount is either:
    • a safe harbour capital return of the individual; or
    • a reasonable return of the individual, taking into account only the individual's contributions of arm's-length capital.
  • If the individual reached age 24 before the year, the income is either income from, or a taxable capital gain from the disposition of, excluded shares of the individual, or a reasonable return in respect of the individual.
Safe harbour capital return

Return obtained by a specidied individual for a taxation year that does not exceed the result of A × B, where:

  • A is the highest rate of interest prescribed for a given quarter of the year;
  • B is the total of the amounts obtained by the formula C × D/E, where:
    • C is the fair market value (FMV) of property contributed by the specified individual to a related business at the time of the contribution,
    • D is the number of days in the year that the property (or property substituted for the peoperty) is used in support of the activities of the related business and has not, directly or indirectly, in any manner whatever, been returned to the specified individual, and à appuyer les activités de l'entreprise liée et n'a pas été retourné, directement ou indirectement, de quelque manière que ce soit, au particulier déterminé,
    • E is the number of days in the year.
Excluded shares

Shares of the capital stock of a corporation owned by the specified individual if:

  • less than 90% of the corporation's business income is from the provision of services;
  • the corporation is not a professional corporation (a corporation that carries on the professional practice of an accountant, dentist, lawyer, physician, veterinarian or chiropractor);
  • the specified individual holds 10% or more of the FMV of the shares of the capital stock of the corporation and 10% or more of the votes that could be cast at an annual meeting of the shareholders of the corporation; and
  • all or substantially all of the corporation's income is not derived, directly or indirectly, from one or more related businesses.

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