Eligible small business corporation this is a Canadian-controlled private corporation, where all or substantially all of the fair market value (FMV) of its assets are used principally in an active business that is carried on primarily in Canada by the corporation or an eligible small business corporation related to it.
It can also be shares of, and/or a debt issued by, other related eligible small business corporations or a combination of such assets, shares, or debt. The issuing corporation must be an eligible small business corporation at the time the shares were issued.
An eligible small business corporation does not include:
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- a professional corporation; a specified financial institution;
- a corporation whose principal business is leasing, renting, developing, or selling real property that it owns or any combination of these activities; and
- a corporation where more than 50% of the fair market value (FMV) of its property (net of debts incurred to acquire the property) is attributable to real property.