Section 85 Rollover Eligibility Checker Canada 2026 | Insight CPA

Free Canadian Tax Tool · Insight CPA

Section 85 Rollover Eligibility Checker Canada 2026 | Insight CPA

Check whether you qualify for a Section 85 rollover under the Income Tax Act. Answer 8 quick questions covering the transferee, property, consideration, elected amount, and filing to see whether s.85(1) can defer your accrued gain — and which ITA rules apply.

Eligibility check

Answer 8 quick questions. We will tell you whether a Section 85 rollover is available for your transfer, plus the specific ITA rule references.

1. Are you transferring property to a taxable Canadian corporation (a corp resident in Canada, not tax-exempt under s.149)?

2. Is the property eligible property under s.85(1.1)? (Most capital property, Canadian resource property, inventory except real estate held as inventory, and certain accounts receivable qualify.)

3. Are you an individual, trust, or Canadian corporation?

4. Will the consideration you receive include at least one share of the transferee corporation?

Hard requirement of s.85(1). Non-share consideration (boot) is permitted alongside.

5. Will the elected amount be within the s.85(1) limits (cannot exceed FMV, cannot be less than the greater of FMV of non-share consideration and specified minimums)?

6. Will you file a joint Form T2057 (or T2058 for partnership rollovers) by the earlier of your and the corporation’s tax-filing deadline?

7. Is the transferee a corporation that you (or a related person) control after the transfer?

8. Are you transferring shares of a corporation to a corporation you control?

How to use this tool

  1. 1
    Confirm the transferee. The receiving corp must be a taxable Canadian corporation. Non-resident corps use different sections (s.85.1 for share-for-share).
  2. 2
    Confirm the property. Check s.85(1.1). Capital property, Canadian resource property, and non-real-estate inventory typically qualify.
  3. 3
    Structure the consideration. Include at least one share of the transferee. Non-share consideration (cash, note) is fine as boot but triggers immediate gain up to its FMV.
  4. 4
    Pick your elected amount. Set the elected amount within the s.85(1)(b) to (e) limits. Usually you elect tax cost (ACB or UCC) to fully defer gain.
  5. 5
    File T2057 on time. Joint election due by the earlier of the transferor’s and transferee’s tax-filing deadline for the year of transfer.

Frequently asked questions

What is a Section 85 rollover?
s.85(1) of the Income Tax Act lets a taxpayer transfer eligible property to a taxable Canadian corporation and defer the accrued gain by electing a value between the tax cost and FMV. In exchange the transferor must receive at least one share of the transferee. It is the workhorse of Canadian incorporation, estate freezes, and asset-sale-to-corp transactions.
Do I need to file Form T2057?
Yes. The rollover is only available if a joint election is filed between the transferor and transferee. Form T2057 is used for individual-to-corp or corp-to-corp transfers; T2058 is used when a partnership is the transferor. The election is due by the earlier of the two parties’ filing deadlines for the year of transfer.
What if I file the T2057 late?
s.85(7) allows late filing up to 3 years late with a penalty capped at the lesser of 1/4 of 1% of the excess per month, or $100/month, to a maximum of $8,000 per s.85(8). Beyond 3 years, s.85(7.1) may still permit filing if the Minister considers it just and equitable.

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