Crystallising the capital gains exemption
Standing item · ground still stableUnchanged since Edition 047 and repeated only because it is the item with a deadline attached to a 24-month lookback. The lifetime capital gains exemption for qualified small business corporation shares runs to roughly $1,275,000 for 2026 — the $1,250,000 Budget 2024 base, indexed. The inclusion rate remains 50%. Qualification is the work: a Canadian-controlled private corporation, at least 90% of asset value in active business use at the moment of sale, more than 50% throughout the preceding 24 months, and 24 months’ ownership. The test that catches software companies is the 90% one — retained cash and passive investments on the balance sheet are not active-business assets.
THIS WEEK · If you ask your accountant only one thing: “If we sold today, would Geomechanica’s shares pass the 90% active-asset test, and if not, by how much?” The answer tells you whether purification is a two-week job or a two-year one — and a freeze is usually sequenced after it, not before.