Can I claim the capital gains exemption if some of my shares are preferred rather than common?

The exemption isn't limited to common shares — the underlying test looks at whether the shares are shares of a qualifying small business corporation, based on how the corporation's assets are used and other qualifying conditions, not at whether the specific share class is common or preferred. Preferred shares issued as part of a legitimate corporate structure, including shares received on an estate freeze, can potentially qualify for the exemption on their own gain if the other conditions are met.

Where preferred shares often come up in practice is exactly that estate freeze scenario: the original owner exchanges growth shares for fixed-value preferred shares, and separately, new common shares (sometimes held by other family members) absorb future growth. Both the preferred shares and the common shares can, in principle, separately qualify for their own holder's exemption if each set of shares and each shareholder independently meets the qualifying conditions — share class alone doesn't decide the answer either way.

Because the specific terms attached to a class of preferred shares, and the history of how and when they were issued, can affect whether they actually qualify, this is worth confirming with a tax advisor for your specific share structure rather than assuming preferred shares are automatically excluded.