Canada's federal government introduced a new tax incentive in Budget 2026. The Canada Growth Incentive includes a capital gains exemption of up to C$15 million. It also expands a small business capital gains rollover.
Eligibility rules
The exemption applies to shares issued before 2037. Eligible businesses must be Canadian-controlled private corporations with assets no greater than C$100 million. They must operate primarily in Canada for at least two years after the shares are issued.
Rollover expansion
The expanded rollover begins on Jan. 1, 2027. Individuals will have three years after the sale year to reinvest in a qualifying Canadian business. SAFE agreements can extend that deferral by another two years.
Founder payoff
A founder with the maximum gain would keep nearly 96% of the exit value, up from 71%. The measure is modeled after the United States QSBS framework. The government expects the policy to lower tax revenue by C$715 million by 2031.
The change reverses a contested 2024 capital gains inclusion rate increase. The exemption is effective immediately. Champagne said the government wants to help create more companies like Shopify.