I did a little research and found the eligible investments for TFSAs. In this document under heading "Shares of private and other corporations", sub heading "Shares of small business corporations" there is clause about owning less than 10% share and less than $25000 total value of the corporation.
Generally, a connected shareholder of a corporation (as defined in subsection 4901(2) of > the Regulations) at any time is a person who
owns, directly or indirectly, at that time, 10% or more of the shares
of any class of shares of the corporation or of any other corporation
related to the corporation.
• such a person is
dealing at arm's length with the corporation or any other related
• the aggregate cost amount of all shares of the
corporation or any other related corporation the person owns, or is
deemed to own, is less than $25,000
that person will not be a
connected shareholder of the corporation.
For purposes of the 10%
and $25,000 tests, the rules in the definition of ìspecified
shareholderî in subsection 248(1) apply with the result that certain
shares will be deemed to be owned by the shareholder. For example, by
virtue of paragraphs (a) and (b), respectively, of that definition,
an annuitant, a beneficiary or a subscriber under a plan trust is
deemed to own the shares owned by a person with whom the annuitant,
beneficiary or subscriber is not dealing at armís length, as well as
the shares owned by the plan trust.
In addition, any share that
• the annuitant, beneficiary, or subscriber under a plan trust; or
• a person not dealing at arm's length with any of the above
has a right to acquire is also included in the calculation of the percentage and
cost amount of the shares held for purposes of the 10% and $25,000
tests pursuant to subsection 4901(2.2) of the Regulations.