• by admin
• November 29, 2025

The Capital Gains Exemption for Qualified Small Business Corporation Shares (QSBCs) is a tax incentive available to Canadian taxpayers who sell shares of a qualified small business corporation. The exemption allows taxpayers to reduce or eliminate the tax they would otherwise have to pay on any capital gains realized from the sale of QSBC shares.

 

To qualify for the exemption, the shares must meet certain criteria, including:

 

1. Being shares of a Canadian-controlled private corporation (CCPC)
2. Having been owned by the taxpayer or a related person for at least two years before the sale
3. Being shares of a corporation whose assets are primarily used in an active business carried on in Canada
4. Meeting certain other requirements under the Income Tax Act.

The amount of the exemption varies depending on the year in which the shares were sold and the province in which the taxpayer resides. As of the knowledge cutoff date of 2025-1, the federal capital gains exemption limit for QSBC shares was $1,250,000 and some provinces and territories also offer additional exemptions on top of the federal limit.

 

Overall, the capital gains exemption for QSBC shares is an important tax incentive for small business owners and investors in Canada. By allowing them to reduce or eliminate the tax on capital gains from the sale of qualifying shares, the exemption can provide significant tax savings and help to encourage investment in small businesses.

 

Our objectives: Learn/Educate/Practice/Advocate        | Call: 647-692-5677; Email: [email protected]

Blogs Canada | Blogs USA | News Canada | News USA | Dates Canada | Dates USA| eLearning

Disclaimer: Information in the post has been presented for a broad and straightforward understanding. This is not a legal advice. RKB Accounting & Tax Services does not accept any liability for its application in any real situation. You need to contact your accountant or RKB Accounting for further information.