Use of Holdcos may prevent accessing the farming capital gains exemption

The use of holdcos can scupper access to the deduction under s. 110.6(2) for dispositions of qualified farm or fishing property. This would be the case where an interest in an unrelated Farmco is held through a Holdco, or where an interest in a farming partnership is held through a 2-tier corporate structure.

Henry Shew and Jody Wong, "Multi-Level Farming Structures and the Capital Gains Exemption", Canadian Tax Focus, Vol. 6, No. 3, August 2016, p. 10 under s. 110.6(1) – share of the capital stock of a family farm or fishing corporation.