Does it matter for the capital gains exemption whether my corporation is Canadian-controlled?

Yes, this is one of the foundational qualifying conditions, separate from how the corporation's assets are actually used. The exemption applies to shares of a qualifying small business corporation, and that test generally requires the corporation to be a Canadian-controlled private corporation — broadly, a private corporation not controlled, directly or indirectly, by non-residents or public companies — both at the time of sale and, in some respects, over a preceding period as well.

If control shifts to non-residents, or the corporation otherwise loses its private, Canadian-controlled status before a sale, this can affect exemption eligibility entirely, regardless of how healthy and genuinely active the underlying business is. This comes up more than owners expect with businesses that have taken on foreign investors, have a foreign parent entity somewhere in the ownership chain, or have shareholders who've since moved outside Canada — situations that can quietly change the corporation's status without anyone treating it as a live issue until a sale is actually being planned.

Because this status is assessed over time, not just at the moment of sale, and works alongside the active-business-asset tests, reviewing your corporation's actual ownership and control history with a tax advisor well before a sale is the way to confirm where you actually stand.