Income Tax Act Subsection 110.6(1), 110.6(1.2), and 110.6(2.2)

In 2015, the amount increased that a taxpayer can claim for the lifetime capital gains exemption as it relates to qualified fishing property. The amount is now $1,000,000.

The definition of qualified fishing property comes from Subsection 110.6(1) of the Income Tax Act.

The fishing property must be owned by an individual, the partner (spouse or common law) of the individual, or a family fishing partnership.

The fishing property could be any of the following:

  • Real or immovable property or a fishing boat that was used to fish in Canada by the same individuals that must own the property (found above);
  • Shares of a family fishing corporation;
  • An interest in a family fishing partnership; or
  • Capital property used by a person or partnership that was used to fish in Canada.

The rules pertaining to the shares are two-fold. One regarding their ownership, and the other regarding the use of the property.

The shares must have been owned by the individual selling them for 24 months prior to the sale, or a person or partnership related to that individual. Newly-issued shares may be used in certain circumstances, but this type of sale must be done in accordance with subsection 110.6(1.2).

The use of the fishing property must meet at least one of the following requirements:

  1. In at least 2 years while the fishing property was owned:
    1. The gross revenue earned from fishing must exceed all other income for the period; and
    2. The fishing property was actively used as a fishing business here in Canada.
  2. Throughout a 24 month period, the property was owned by the individuals referred to above, it was used in a fishing business, meets the definition of qualified fishing property found in subsection 110.6(1) of the Income Tax Act, and was used regularly by a partnership or a corporation that meets the definitions found in subsection 110.6(1)(a)(iv) and (v)


CRA Resources

CRA guide T4004 Fishing Income