Legislative Status: Proposed Measure (Federal Budget 2026 — Tabled Nov 5, 2026) · track the bill Last Verified: 2026-11-13

Budget 2026 Proposal · Issuance Window: Nov 5, 2026 – 2036

Up to $15M in exempt startup exit gains.

Canada’s proposed answer to U.S. QSBS would let founders, employees, and angels exempt up to $15M of capital gains per person, per business on shares issued from November 5, 2026—plus a longer small business rollover that accepts SAFEs. Model your exit, including AMT, then run the 6-point share eligibility self-check below.

✓ Resets on every startup: $15M cap applies per person, per business—unlike the $1.275M lifetime LCGE.
✓ 36-month hold & ≤$100M asset cap: Newly issued treasury shares from Nov 5, 2026 onward (trusts & HoldCos excluded).
✓ SAFE timing: the 36-month clock can’t start until a SAFE converts into shares; the rollover allows up to 5 years after the sale year.

Run 6-Point Eligibility Check ↓ Browse the deep-dive guides →

2026 CGI vs. LCGE + AMT Estimator 50% CG · 30% AMT

Qualifying Exit Capital Gain $10,000,000

Province / Territory

Qualifying Co-Founders / Holders

No Exemption

$3,137,323

incl. $460,823 AMT

LCGE Only ($1.275M)

$2,830,234

incl. $494,988 AMT

With $15M CGI

$723,350

incl. $723,350 AMT

Exit-Year AMT on the CGI Exit $723,350

30% of the CGI-exempt gain enters the AMT base (20.5% federal rate above $181,440). If your income stays near $160,000, about $203,387 of the federal AMT is recoverable over 7 years and $377,011 would expire unused.

6-point share eligibility self-check

Under Budget 2026’s proposed framework, CGI qualification is determined on the day shares are issued—not when you sell. Toggle each requirement below to see how the rules apply. Employees: see when the clock starts for stock options.

✓

Issuance Date & Instrument Must be newly issued Nov 5, 2026 – Dec 31, 2036

✓

Subscription Consideration Original treasury issuance test

✓

Registered Shareholder Individual, owning directly (or via partnership)

✓

Entity & Asset Size Ceiling Includes related corporations before & after issuance

✓

Primary Business Activity Product/IP company vs. excluded practice

✓

Active Business Asset Ratio All or substantially all active assets at issuance; ≥50% throughout

Raising on a SAFE? Watch the 36-month clock.

Budget 2026 names SAFEs only in the small business rollover. For the $15M exemption, the 36-month clock and the $100M asset test can’t start until a SAFE converts into actual shares—and whether conversion shares qualify at all awaits the draft legislation.

Track A: Priced Seed Equity Round (Closed Nov 2026) CGI-eligible sale from Nov 2029

36-Month Hold Starts Day 1 (≤$100M Locked)

$15M CGI Eligible Window

Track B: Unamended SAFE (Signed Nov 2026 → Converts Mid-2028) Earliest mid-2031 + $100M test at conversion

SAFE Unconverted (No Clock)

36-Mo Hold Starts at Conversion

2031+

Where SAFEs win: the rollover window

Reinvesting proceeds from selling eligible small business corporation (ESBC) shares to defer the gain? For sales from January 1, 2027, Budget 2026 proposes:

A replacement window of the year of sale + 3 calendar years (today: the year of sale or the next year).
Signing a SAFE with an ESBC before that window closes adds 2 more years, to the end of the 5th year after the sale year (rollover deadline calculator).
Caution: if no shares are issued by then, the deferred gain is taxed, and prescribed-rate interest applies to proceeds never reinvested.

Key Questions for Seed Financing Docs

Three structural mechanics founders and angels are discussing with legal counsel while awaiting Finance Canada’s technical bill:

Priced Seed vs. SAFE: Issuing treasury shares on Day 1 starts the 36-month clock immediately while assets sit well below $100M.
Outside Conversion Dates: Whether an automatic 12–18 month conversion clause prevents multi-year SAFE limbo.
Pre-$100M Asset Triggers: Ensuring SAFEs convert before any later financing pushes corporate assets past $100M CAD.

SAFE guide + conversion-date calculator →

CGI vs. LCGE vs. U.S. QSBS (§1202)

How Budget 2026’s proposed $15M Canadian CCPC exemption compares against Canada’s existing LCGE and U.S. Section 1202 QSBS. Deep dives: CCPC + CGI vs. a Delaware flip and CGI vs. LCGE family-trust multiplication.

Rule	Proposed CGI (Budget 2026)	Canadian LCGE (2026)	U.S. QSBS (IRC §1202)
Tax-Free Gain Cap	$15,000,000 CAD	$1,275,000 CAD (indexed)	$15M USD or 10× basis (stock issued after Jul 4, 2025)
Lifetime vs. Per-Company	Per person, per business	Lifetime aggregate limit	Per taxpayer, per C-Corp
Share Issuance Cutoff	Nov 5, 2026 – Dec 31, 2036	None (existing shares eligible)	Original C-Corp issuance
Minimum Hold Period	36 consecutive months	24 months	3 / 4 / 5 years → 50% / 75% / 100% excluded
Asset Cap at Issuance	≤$100M CAD carrying value (incl. related corps)	No issuance-day cap	≤$75M USD gross assets (post-Jul 4, 2025)
Family Trusts Allowed?	✕ No — individuals (18+), held directly or via partnership	✓ Yes — Trust multiplication	Certain non-grantor trusts
AMT Inclusion Rate	30% of exempt gain in AMT base	30% of exempt gain in AMT base	Excluded gain not an AMT preference
Corporation at Sale	Canadian-resident; private or listed on a Canadian exchange	Small business corporation (CCPC) at sale	C-corporation meeting active-business tests

Excluded businesses under the proposed CGI (how the list and the $100M asset test apply to SaaS, fintech and proptech): consulting services; professional practices of accountants, lawyers, notaries, physicians, other health care practitioners, engineers and architects; any business whose principal asset is the reputation or skill of one or more employees; businesses in the agricultural, fishing, forestry, mining, financial, insurance, utilities, real estate, food and accommodation, arts, recreation or entertainment sectors; and businesses operating under a licensing or franchising agreement.

Deep-dive guides

Each guide answers one question with worked 2026 dollar figures, an interactive tool, and citations to the Budget 2026 annex and the Income Tax Act.

SAFE Financing Do SAFEs qualify for the Canada Growth Incentive? When the 36-month clock can start for SAFE holders, the $100M test at conversion, and the rollover’s SAFE extension. Existing Shares Founder shares issued before November 5, 2026 Keep the LCGE, subscribe for new shares, or start a new venture — and why share swaps don’t qualify. Bill Status Is the Canada Growth Incentive law yet? Milestone tracker from the November 5, 2026 Budget to draft legislation and Royal Assent. Cross-Border CCPC + CGI vs. Delaware C-Corp + QSBS Net-after-tax exit math for Canadian- and U.S.-resident founders at $5M, $15M and $30M. Family Structuring CGI vs. LCGE family-trust multiplication Break-even tables: one founder’s $15M CGI vs. a four-beneficiary trust claiming the LCGE. AMT AMT on a Canada Growth Incentive exit Exit-year AMT at $2M–$15M by province, and how much the 7-year carryforward actually recovers. Rollover Section 44.1 small business rollover after Budget 2026 Replacement-share deadlines, the SAFE extension to five years, and how much gain is deferred. Eligibility Excluded industries & the $100M active asset test SaaS vs. consulting, fintech and proptech edge cases, and the 36-month cash deployment rule. Employee Equity Stock options, sweat equity & the 36-month clock Why the CGI clock starts when shares are issued, not when options are granted.

Common questions

Plain-English answers based on Department of Finance Budget 2026 supplementary tax measures tabled November 5, 2026.

Get Draft Legislation Alerts

Do founder shares issued before November 5, 2026 qualify for the Canada Growth Incentive?

No. The proposal applies only to shares issued on or after November 5, 2026 and before 2037, solely for cash or in exchange for the holder’s employment services. Earlier shares keep access to the Lifetime Capital Gains Exemption ($1,275,000 in 2026) if they meet the qualified small business corporation tests. See our guide to pre-Budget founder shares for the options.

Can two co-founders each claim the $15M exemption on the same startup?

Yes, as proposed. The $15 million limit “would apply separately to each qualifying individual in respect of each business,” so two co-founders who each hold qualifying shares for 36 months could each shelter up to $15M ($30M combined). A genuinely different later business carries its own limit, subject to the promised integrity rules on multiple corporations carrying on the same underlying business.

Can a family trust or holding company claim the Canada Growth Incentive?

Not as proposed. A qualifying individual must be an individual other than a trust, at least 18 when the share was acquired, and resident in Canada throughout the year of the claim. The share must be owned directly by that individual or by a partnership of which they are a member, so ownership through a holding company does not appear to qualify.

How does the Alternative Minimum Tax affect a Canada Growth Incentive exit?

30% of a CGI-exempt gain is included in the AMT base, the same treatment as LCGE gains. With a $15,000,000 exempt gain and $160,000 of salary, federal AMT is about $887,898, plus about $218,689 of Ontario AMT. The excess can be carried forward 7 years but is only recovered to the extent future regular tax exceeds AMT, so much of it can expire unused. See the AMT guide and 7-year recovery schedule.

Is the Canada Growth Incentive law yet?

No. It is a Federal Budget 2026 proposal tabled November 5, 2026. The Ways and Means Motion contains only a general enabling clause; draft legislation, the promised integrity rules and the bill itself are still to come. As proposed, it would apply to qualifying shares issued from Budget Day once enacted. Follow each step on our legislative tracker.

Statutory & official source references

Department of Finance Canada — Budget 2026: Tax Measures: Supplementary Information (sections “Canada Growth Incentive – Capital Gains Exemption” and “Canada Growth Incentive – Rollover for Investments in Small Businesses”), tabled November 5, 2026.
Department of Finance Canada — Notice of Ways and Means Motion to amend the Income Tax Act (Budget 2026).
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 110.6 — Lifetime Capital Gains Exemption and “qualified small business corporation share” definition.
Income Tax Act, s. 44.1 — Eligible Small Business Corporation (ESBC) share rollover (as amended by S.C. 2026, c. 3).
Income Tax Act, ss. 127.5–127.55 — Alternative Minimum Tax.
Income Tax Act, s. 120.2 — 7-year minimum tax carryover.
Income Tax Act, s. 125(7) — “Canadian-controlled private corporation” and “active business carried on in Canada” definitions.
Income Tax Act, s. 248(1) — “small business corporation” and “active business” definitions.
Canada Revenue Agency — Indexation adjustment for personal income tax and benefit amounts (2026 indexation 2.0%; 2026 LCGE $1,275,000; 2026 federal brackets).
Secondary reference for provincial rates: TaxTips.ca — 2026 Canadian tax rates (provincial pages revised November 8, 2026).

Every rate and threshold used on this site is listed, with its source, in our 2026 tax & AMT methodology.

Legislative Tracker · Free Email Alert

Get notified when Finance Canada releases the draft CGI bill.

Right now, the Canada Growth Incentive exists only in the November 5, 2026 Budget papers. Enter your email to get a concise, plain-English summary when the Department of Finance publishes the official draft Income Tax Act amendments (clarifying SAFE conversions, anti-avoidance rules, and Royal Assent timing).