How much is the lifetime capital gains exemption in 2026?

$1,275,000 of capital gains on qualified small business corporation shares. The limit was $1,250,000 for sales from June 25, 2024 through 2025, and indexation to inflation resumed in 2026.

Which shares qualify for the exemption?

Shares of a Canadian-controlled private corporation that pass three tests. At the time of sale, all or substantially all of its assets by fair market value are used mainly in an active business carried on primarily in Canada. For the 24 months before, no one other than the seller or a related person owned the shares, and more than 50 percent of the assets were used that way.

Why can minimum tax apply when the exemption covers the gain?

Minimum tax is a second calculation that counts the whole capital gain and 30 percent of the gain the exemption shelters. On a large sale it often exceeds regular tax, with or without the exemption. The excess is credited against regular tax in the following seven years, to the extent regular tax in those years is higher than minimum tax.

What is the capital gains inclusion rate in 2026?

One half. The increase to two thirds on gains above $250,000 proposed in 2024 was cancelled on March 21, 2025.

InvestDeal

CALCULATORS

Capital gains tax on the sale of a business

The 2026 tax on selling shares, with the lifetime capital gains exemption.

THE SALE

Sale price of the shares

Not sure of the price? Get a free AI valuation

Adjusted cost baseShares issued for a nominal amount have a cost base near zero

Selling costsAdvisory, legal and accounting fees

THE SELLER

Province of residence

Other taxable income in 2026Salary, dividends and other income for the year

LIFETIME CAPITAL GAINS EXEMPTION

Shares qualify as qualified small business corporation shares

Confirmed by the seller’s accountant against the tests on the day of sale

Exemption already usedOf the $1,275,000 limit for 2026

Estimated tax on the sale

20.3% of the capital gain

Sheltered by the exemption
Gain after tax
Tax

Capital gain$2,909,900

Lifetime capital gains exemption−$1,275,000

Taxable capital gain, one half$817,450

Regular tax on the gain$431,580

Alternative minimum tax above regular tax$159,083

Estimated tax on the sale$590,663

Proceeds after costs and tax$2,319,337

Alternative minimum tax applies in the year of the sale. The $159,083 above regular tax is credited against regular tax in the following seven years, in years when regular tax is the higher of the two.

The tax follows the price. The price starts with a valuation.Get your free valuation

Method and assumptions

An estimate for planning. A sale is priced and taxed on its own facts, confirmed by the seller’s advisors.

GUIDES

InvestDeal

The future of M&A advisory starts here

AI-native M&A advisory for Canadian business owners.

Get started

01The capital gain equals the sale price less the adjusted cost base and selling costs.
02Where the shares qualify, the lifetime capital gains exemption shelters up to $1,275,000 of the gain in 2026, less any amount used before.
03One half of the remaining gain is taxable. The tax on the sale is the federal and provincial tax on the seller’s income including the gain, less the tax on the other income alone, at 2026 rates.
04Alternative minimum tax is calculated alongside, federally and in the province. Where it exceeds regular tax, the excess is payable for 2026. It is credited against regular tax in any of the following seven years in which regular tax is higher than minimum tax.
05The calculation assumes one individual shareholder, resident in the province for the whole year, with no other capital gains, losses or deductions in 2026.

Source: CRA, capital gains deduction; CRA, 2026 indexed amounts; CRA, Form T691 minimum tax

Free valuations from InvestDeal AI models trained for each industry

Get your free valuation

Your financials

IndustryPrecision manufacturing

Revenue$7.2M

Adjusted earnings$1.45M

How buyers price it (three ways)

Revenue multiple0.6 – 0.9×

EBITDA multiple4.5 – 6.0×

Adjusted earnings multiple3.8 – 5.1×

$0.0M – $0.0M

$1.45M adjusted earnings at 3.8 – 5.1×, the multiple this profile earns

Two things would move it before you sell: your largest customer is 38% of revenue, and most of the business still runs through you

What comparable sales cleared at (28 in your sector and size)

Median 4.2×

You, 4.6×

Get an instant valuation based on your financials and comparable sales with our model

How InvestDeal compares with a traditional sale

TRADITIONAL PROCESS

InvestDeal

Buyer matches
TRADITIONAL
80% of businesses listed never sell
50+
Qualified buyer matches per business, on average
Time to interest
TRADITIONAL
9 to 12 months from listing to close
30 days
To initial buyer interest
Fees
TRADITIONAL
6%+ success fee, plus upfront fees or a retainer
Success fee only
$0 upfront, no retainer
Buyer reach
TRADITIONAL
Limited to one broker’s personal network
Platform-wide matching
Across active buyer demand
Valuation
TRADITIONAL
Asking price set by rule of thumb
AI valuation models
Trained for each industry, free for every owner

Speak with an advisor

Book a free call to discuss your company, likely buyers and how a sale would work.

Your advisor

WHAT YOU’LL GET

01. An initial value range

An estimate of what your business could sell for

02. Likely buyers

Which strategic and financial buyers may be interested

03. The sale process

Timing, next steps and what a sale involves

No upfront fees or retainer. Success fee only.

Frequently asked questions

Start preparing your sale

Get started Contact us

A desk at night under a single lamp: a stack of agreement pages held by a clip, a dark folder, and a fountain pen laid between them.