BOR and the Personal Income Tax Act (substantial interest, Box 2)

If you do not make use of the BOR for personal income tax purposes (“BOR-IB”), gifting a substantial share interest will constitute a taxable alienation for Box 2 personal income tax purposes at the level of the donor. In the year in which the gift was made, personal income tax in Box 2 (2021 rate: 26.9%) will then be due on the fair market value (“WEV”) of the shares transferred less the original acquisition cost.  

If you do make use of the BOR-IB, the personal income tax due in Box 2 on the shares transferred can be passed on (fully) to the transferee insofar as those shares represent business assets. 

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