Stewart, a Canadian resident, is considering selling his shares of AA Ltd. which operates a printing business in Canada. He hopes that he will be able to use the capital gains deduction to shelter the gain from tax. Stewart purchased his shares of AA Ltd. four years ago for $1,000,000 and he estimates that they are now worth $2,000,000. Stewart owns 100% of the company. The latest balance sheet for AA Ltd. is below.

The value of the current assets approximates their fair market value. The business premises (land and building) are estimated to be worth $1,600,000. The equipment is valued at $80,000. The goodwill is estimated to be worth $500,000. The relative values of the assets have remained consistent throughout the last two years.
Determine if AA Ltd. is currently a qualified small business corporation. Income tax reference: ITA 110.6(1) qualified small business corporation definition.

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AA Ltd Balance Sheet Assets Liabilities & Shareholder's Equity Cash Inventory Due from shareholder Equipment Land and building S 100,000 20,000 800,000 180,000 700.000 Liabilities Share capital Retained earnings S 900,000 1,000 899.000