Business Leaders Push for Capital Gains Tax Deferral to Retain Funds in Canadian Firms

Rolls of paper are prepared for the manufacturing of cardboard box packaging at a factory in Drummondville, Que., on March 27, 2026. The Canadian Press/Christinne Muschi

More than 150 Canadian business leaders are calling on Ottawa to overhaul its tax framework to encourage greater investment in homegrown companies.

Canadian entrepreneurs, corporate executives, financial backers, and trade groups have jointly petitioned Finance Minister François-Philippe Champagne to consider two policies they say will bolster domestic entrepreneurship and “create a cycle in which one Canadian success increases our capacity to produce the next.”

“We believe two targeted tax changes can strengthen that cycle while complementing the government’s broader investment agenda,” the group said in an open letter to Champagne.

The campaign, dubbed Bet on Canada, is led by the Canadian Venture Capital and Private Equity Association in partnership with the Council of Canadian Innovators.

The first policy advocates for the country to implement a framework comparable to the U.S. qualified small business stock incentive, which allows investors to exclude capital gains derived from qualified small business stocks.

The letter suggests raising the incentive cap for every taxable transaction to $15 million, eliminating what it describes as restrictive ownership requirements, and expanding eligibility so the benefit extends to a wider range of people who are undertaking risks in building and financing Canadian enterprise.

“These changes would make Canada more competitive with the United States,” the letter says, adding that it would give founders “a stronger incentive to spend years building a valuable company here.”

The group argues it would also benefit early employees who accept equity as part of their compensation and would give investors a better potential after-tax return for committing capital when a company’s prospects remain uncertain.

“It would also send an important signal about Canada’s ambition: that we want the world’s most ambitious entrepreneurs to build here, successful investors to keep putting capital to work here, and world-class talent to see Canada as a place where taking a risk can be rewarded,” the letter says.

The group’s second recommendation would allow entrepreneurs and investors to defer capital gains tax obligations when they reinvest profits from domestic business transactions into new Canadian enterprises, according to the letter.

This mechanism is known as a capital gains tax rollover, a policy designed to keep investment capital circulating continuously within the domestic ecosystem. 

By removing the immediate tax hit on a successful exit, it removes a major friction point for serial investors and founders, the group says.

The letter says the policies should not be limited to the technology sector, but should also include companies in advanced manufacturing, life sciences, mining, and natural resources.

“We appreciate the ambition the government has brought to attracting capital, improving Canada’s investment climate and accelerating major projects,” the letter reads. “We believe there is an opportunity to apply that same focus to the people willing to finance and build Canadian companies.”

The Epoch Times contacted the finance ministry for comment on the letter but did not immediately hear back.