A person may not be related to herself for QSBC share purposes
Unlike the concept of “affiliated person,” as to which s. 251.1(4)(a) provides that all persons are affiliated with themselves, persons are deemed to be related to themselves only for specific purposes under ss. 251(5)(c), 55(5)(e)(ii) and 261(1.5).
Suppose that Ms. Y sells all the shares of her company to a family trust whose beneficiaries are she and her spouse and children. On a subsequent third-party sale by the trust of those shares, the QSBC definition requires that the shares have been owned by the trust, or a person related to the trust, for the prior 24-month period – and in this regard, s. 110.6(14)(c)(ii) provides that where a person who sold shares to a trust was related to all the beneficiaries, that person and the trust are deemed to have been related for the above purpose.
Ms. Y is related to her spouse and children, but no provision specifically deems her to be related to herself for such purposes and, thus, s. 110.6(14)(c)(ii) “cannot be relied on to deem the trust to be related to Ms. Y.”
Neal Armstrong. Summary of David Carolin and Manu Kakkar, “Are Persons Related to Themselves? CGE Planning and the 24-Month Holding Period Rule,” Tax for the Owner-Manager, Vol. 21, No. 4, October 2021, p. 3 under s. 110.6(14)(c)(ii).