Is small business deduction applicable to Capital Gain from property generating active income?

A corporation used to enjoy the small business deduction which effectively at a lower tax rate. Is the capital gain from sales of property which generate the active income be taxed at the same rate? Profile seems restricted that capital gain to be passive income in T2. 

Answer

Hi,

I hope all is well and you had a great weekend. It looks like sale of property may be passive income. Can you please review SBD criteria here on Page 57 to see if it clarifies the situation: 

http://www.cra-arc.gc.ca/E/pub/tg/t4012/t4012-16e.pdf

Also more information on Active income here:

http://www.taxtips.ca/glossary/activebusinessincome.htm and https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/it73r6-archived-sma...

Please let me know if this helps. Thank you

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