What happens to my capital gains exemption claim if I sell to a corporation I still partly control?

Selling to a corporation you still partly control puts your transaction under closer scrutiny, because the exemption and the tax rules around it are built around a genuine disposition to someone else, not an arrangement where you retain an ongoing interest in the very corporation now holding your former shares or business. Where the seller and buyer aren't dealing at arm's length, or where the seller retains significant control over the purchaser, specific rules aimed at related-party transactions and capital gains stripping can apply, and these can deny the exemption or recharacterize part of the proceeds rather than accepting the transaction at face value.

This doesn't mean a sale to a corporation you partly control is automatically disqualified, but it does mean the analysis is more involved: the CRA and the applicable anti-avoidance provisions look at the substance of what actually changed, not just the paperwork describing a "sale." A transaction priced and documented as if it were between genuine strangers, with real economic substance behind the change in ownership, holds up far better than one that looks designed mainly to access the exemption while your practical control continues.

Given how fact-specific and technical this area is, get tax advice before structuring a sale to any entity you retain an interest in.