Selling a business in Canada in 2026: what changed since 2024
The capital gains rules for sellers moved several times between 2024 and 2026. Here is each change with its date and what it means for a sale, updated every January.
For a sale in Canada in 2026, one half of a capital gain is taxable, since the two thirds proposal was cancelled in March 2025. The lifetime exemption is $1,275,000 for qualifying shares. The Canadian Entrepreneurs’ Incentive was cancelled and the employee ownership trust exemption is now permanent. Minimum tax can apply in the year of the sale.
What changed for sellers, 2024 to 2026
Selling a business in Canada in 2026 happens under rules that moved several times in two years. Some of the capital gains changes proposed in 2024 went ahead and others were cancelled, so an owner reading an article from that year can come away with the wrong rate. This page sets out what applies today, with the date of each change and what it means for a sale.
It reflects the rules as of October 2026. We update it each January, when the indexed amounts for the new year are published, and whenever a measure listed here passes into law or is withdrawn.
Every change, with its date
| Date | What changed | What it means for a sale |
|---|---|---|
| January 1, 2024 | New alternative minimum tax rules, with a 20.5 percent federal rate | A sale that uses the exemption can bring minimum tax in that year |
| January 1, 2024 | Conditions for intergenerational transfers take effect | A sale to a child’s company can be taxed as a capital gain when the conditions are met |
| April 2024 | Budget 2024 proposes a two thirds inclusion rate above $250,000 of gains a year, and the Canadian Entrepreneurs’ Incentive | Both proposals were later cancelled |
| June 25, 2024 | Lifetime capital gains exemption rises to $1.25 million | About a quarter more of a qualifying gain is sheltered |
| March 21, 2025 | The rise in the inclusion rate is cancelled, and the $1.25 million exemption kept | One half of a capital gain stays taxable |
| November 2025 | Budget 2025 confirms the Canadian Entrepreneurs’ Incentive is cancelled | The exemption and the one half rate are the rules to plan on |
| January 1, 2026 | The exemption is indexed to $1,275,000 | The higher limit applies to sales that close in 2026 |
| June 18, 2026 | Bill C-30 makes the $10 million exemption for sales to an employee ownership trust permanent | A sale to staff can be planned past 2026 |
| September 15, 2026 | The Productivity Mega Deduction is announced in draft | A buyer of assets may write off much of their cost at once |
| December 31, 2026 | CEBA loans fall due in full | An unpaid balance belongs in the closing figures |
Capital gains: the rate that held and the exemption that rose
The inclusion rate is the share of a capital gain that is added to your income and taxed. In April 2024 Finance Canada proposed raising it from one half to two thirds for an individual’s gains above $250,000 in a year, from June 25, 2024. On March 21, 2025 the Prime Minister announced its cancellation, and the rate stays at one half.
The same release kept the increase in the lifetime capital gains exemption to $1,250,000, which had applied from June 25, 2024. Indexing raised it to $1,275,000 for 2026. The exemption covers qualified small business corporation shares, and the lifetime capital gains exemption explains the tests the shares have to pass.
Budget 2024 also proposed the Canadian Entrepreneurs’ Incentive, which would have cut the inclusion rate to one third on up to $2 million of a founder’s gains over a lifetime. A footnote to Table A1.18 of Budget 2025, Annex 1 records its cancellation together with the inclusion rate change. A plan that counted on it needs redoing.
Minimum tax on a sale that uses the exemption
The alternative minimum tax is a second calculation of your tax that applies when it comes out higher than the regular one. New rules apply from the 2024 tax year, and Form T691 shows how they reach a business sale.
The 2024 form adds back the half of each capital gain that regular tax leaves out, then subtracts 40 percent of the exemption claimed. The result is that 30 percent of a gain sheltered by the exemption counts toward minimum tax. Tax is then 20.5 percent federally on adjusted income above a basic exemption, which was $173,205 for 2024.
An owner whose sale is covered mostly by the exemption, with little other income that year, is the one most likely to owe it. Minimum tax paid can be carried forward and set against regular tax in later years. Your accountant runs both calculations before closing, and the tax implications of selling a business covers the rest of the return.
Transfers to family and to employees
From January 1, 2024, a sale of shares to a company your adult children control can be taxed as a capital gain when it meets the conditions for an immediate or a gradual transfer, according to the explanatory notes for section 84.1. Selling a business to your children sets out both routes.
The exemption of up to $10 million on a sale to an employee ownership trust first covered sales from 2024 to 2026. Bill C-30, which received Royal Assent on June 18, 2026, made it permanent, and the trust was one of the subjects at Canada’s Succession Summit 2026. Selling to your employees through a trust explains how such a trust works and how the purchase is funded, and an employee ownership trust or a third party sale prices the two routes for one company.
The new deduction, and a loan that falls due
On September 15, 2026 Finance Canada announced the Productivity Mega Deduction, which would let a business write off most depreciable assets in the year they are ready for use. It is draft legislation, and goodwill sits outside it. What it changes in an asset sale works through the effect on price.
The Canada Emergency Business Account loans that missed the forgiveness deadline fall due on December 31, 2026. Most offers are priced debt free, so a balance still owing is paid from the price at closing, as CEBA loans and a sale explains.
What this means for a sale in 2026
An owner selling qualifying shares in 2026 plans on a one half inclusion rate and an exemption of $1,275,000, then checks minimum tax for the year of the sale. The amounts that change each January are the exemption and the minimum tax threshold, and this table will carry the 2027 figures once the CRA publishes them.
To see what those rules leave you from a sale, net proceeds from selling a business walks one illustration from price to cash. The Quick AI valuation gives the price range to start from.
Each stage of a sale, from preparation and valuation to buyers, tax and transition, is set out in how to sell a business in Canada.
Questions owners ask
- What is the capital gains inclusion rate in 2026?
- One half. Budget 2024 proposed two thirds on an individual’s gains above $250,000 a year, and on March 21, 2025 the government announced that the increase was cancelled. Half of a capital gain is added to income and taxed at your marginal rate.
- What is the lifetime capital gains exemption for 2026?
- It is $1,275,000 for qualified small business corporation shares. The exemption rose to $1.25 million for sales from June 25, 2024 and is indexed to inflation from 2026, so the figure changes each January.
- What happened to the Canadian Entrepreneurs’ Incentive?
- It was cancelled. Budget 2024 proposed a one third inclusion rate on up to $2 million of a founder’s lifetime gains, and Budget 2025 recorded its cancellation together with the cancelled rise in the inclusion rate.
- Can minimum tax apply when I sell my business?
- Yes. Under the rules that apply from 2024, 30 percent of a gain sheltered by the exemption counts toward alternative minimum tax, at a 20.5 percent federal rate above a basic exemption. Minimum tax paid can be carried forward against regular tax in later years.