Income Tax Act — I-3.3 84.1
ant group entity; and (h) the taxpayer and the child, or the taxpayer and each member of the group of children, as the case may be, (i) jointly elect, in prescribed form, for paragraph (2)(e) to apply in respect of the disposition of the subject shares, and (ii) file the election with the Minister on or before the taxpayer’s filing-due date for the taxation year that includes the disposition time. Gradual intergenerational business transfer (2.32) Paragraph (2)(e) applies at the time of a disposition of subject shares (referred to in this subsection as the “disposition time”) by a taxpayer to a purchaser corporation if the following conditions are met: (a) the taxpayer has not previously, at any time after 2023, sought an exception to the application of subsection (1) pursuant to paragraph (2)(e) in respect of a disposition of shares that, at that time, derived their value from an active business that is relevant to the determination of whether the subject shares satisfy the condition set out in subparagraph (b)(iii); (b) at the disposition time, (i) the taxpayer is an individual (other than a trust), (ii) the purchaser corporation is controlled by one or more children (within the meaning of paragraph (2.3)(a), and referred to in this subsection as the “child” or “children”) of the taxpayer, each of whom is 18 years of age or older, and (iii) the subject shares are qualified small business corporation shares or shares of the capital stock of a family farm or fishing corporation (as those terms are defined in subsection 110.6(1)); (c) at all times after the disposition time, the taxpayer does not — either alone or together with a spouse or common-law partner of the taxpayer — control (i) the subject corporation, (ii) the purchaser corporation, or (iii) any person or partnership (referred to in this subsection as a “relevant group entity”) that carries on, at the disposition time, an active business (referred to in this subsection as a “relevant business”) that is relevant to the determination of whether the subject shares satisfy the condition in subparagraph (b)(iii); (d) at all times after the disposition time, the taxpayer does not — either alone or together with a spouse or common-law partner of the taxpayer — own, directly or indirectly, (i) 50% or more of any class of shares, other than shares of a specified class as defined in subsection 256(1.1) (in this subsection referred to as “non-voting preferred shares”), of the capital stock of the subject corporation or of the purchaser corporation, or (ii) 50% or more of any class of equity interest (other than non-voting preferred shares) in any relevant group entity; (e) within 36 months after the disposition time and at all times thereafter, the taxpayer and a spouse or common-law partner of the taxpayer do not own, directly or indirectly, (i) any shares, other than non-voting preferred shares of the capital stock of the subject corporation or of the purchaser corporation, or (ii) any equity interest (other than non-voting preferred shares) in any relevant group entity; (f) within 10 years after the disposition time (referred to in this subsection as the “final sale time”) and at all times after the final sale time, the taxpayer and a spouse or common-law partner of the taxpayer do not own, directly or indirectly, (i) in the case of a disposition of subject shares that are, at the disposition time, shares of the capital stock of a family farm or fishing corporation (as those terms are defined in subsection 110.6(1)), interests (including any debt or equity interest) in any of the subject corporation, the purchaser corporation, and any relevant group entity with a fair market value that exceeds 50% of the fair market value of all the interests that were owned, directly or indirectly, by the taxpayer and a spouse or common-law partner of the taxpayer immediately before the disposition time, or (ii) in the case of a disposition of subject shares that are, at the disposition tim