Free download: The 8-Figure Exit Guide
The exit playbook for owners of $5M–$50M companies and businesses with $1M+ in EBITDA. Get your free copy →
Sorry to my American readers, but this edition is going to focus on the recent budget of your 51st state ;)
This is embarrassing to admit, but I had a genuinely good time reading the federal budget last night. I can only imagine how dull my life will look at 60.
In a departure from boredom, this budget was titled “Masters of Our Destiny,” which is a very dramatic title for a document that arouses accountants. But on page 378, there’s a line every Canadian founder is going to see plastered all over LinkedIn this week:
A new tax exemption on up to $15 million in capital gains.
That would mean a founder with a $15 million gain would keep nearly 96% of it on exit, compared with 71% before this budget.
That exemption is called the Canada Growth Incentive. Canadian-resident individuals can exempt up to $15 million of capital gains on qualifying shares. And that’s $15 million per person, per business. Three co-founders? That’s potentially $45 million between them.
The catch. Three of them, actually:
New shares only: The shares have to be issued on or after November 5, 2026, either for cash or in exchange for working at the company. The shares you’ve owned since you incorporated in 2009 don’t count.
You have to hold them for 36 months: So the earliest anyone can actually use this is late 2029.
A lot of industries are out: Consulting, professional practices (accountants, lawyers, doctors, other health care practitioners, engineers), any business whose main asset is the reputation or skill of its people, franchises, real estate, food and accommodation, finance, insurance and a handful more.
So if you are desperate to sell within the next year or two… this one doesn’t apply (and that might sting).
The good news: there were no changes to the Lifetime Capital Gains Exemption, the capital gains inclusion rate or the Employee Ownership Trust exemption. Your current exit plan still stands.
What this means if you own a $5M–$50M revenue business:
Selling your shares and reinvesting? You get more time: Today, if you sell shares of a qualifying small business and reinvest in another one, you have until the end of the following year to do it. From January 1, 2027, you get the year of sale plus three more years (up to five if you commit the money through a SAFE). The fine print: it’s for share sales by individuals (not holdcos), and you pay interest on anything you never end up reinvesting. Closing a share sale around year-end? January might be worth the wait. Ask your accountant.
Buyers just got a raise: The new Productivity Mega Deduction lets businesses write off the full cost of about two thirds of capital assets right away, permanently. Before, it was roughly 15%. Kitchen equipment, trucks, medical imaging, software. Buyers who plan to keep investing after closing keep more cash to do it, which makes growth plans easier to finance and easier to justify.
Buying a business? The catch is your opportunity: “New shares issued for cash” is exactly what you’re doing when you buy a company. Searchers, management teams doing a buyout, people backing a buyer: the equity you put in could qualify, as long as the business isn’t in an excluded industry. The anti-abuse rules aren’t out yet, so get advice before you structure a deal around it.
Creative deal structures got easier: Private companies will no longer pay a special tax on dividends from certain preferred shares. This sounds boring (it is). But what’s interesting is that preferred shares are how a lot of management buyouts and seller-financed deals get paid out over time. Translation: one less tax headache when you take part of your price as equity in the buyer’s company.
Own a clinic? Check your margins: Massage therapy is now exempt from GST/HST. Patients pay less, which is great for demand. But you can no longer claim input tax credits on the costs behind those services.
The takeaway in one sentence: Budget 2026 rewards the next thing you build or buy far more than the business you’re selling today, so how you structure your sale still decides what you keep.
(Not tax advice. These are proposals, not law yet. Talk to your accountant before you do anything.)
Thinking about selling, or reinvesting after a sale? Book a confidential call with our team to help you understand what Budget 2026 means for your timing and deal structure. Schedule a call →
founder fitness
4 rounds:
36-second plank hold
15 kettlebell swings
10 push-ups
36-second wall sit
Rest 60 seconds between rounds. Drop to your knees on the push-ups if needed.
founder challenge: the $15M exit plan
The proposed exemption requires a 36-month hold. So here’s a mental exercise: what could you do over the next 36 months to build a better business?
Imagine it’s three years from now. Your business is more valuable, runs more smoothly, and depends less on you. What changed? Maybe you built a strong second-in-command, documented your sales process, or reduced your reliance on one big customer.
Write down three changes you’d need to make. Then pick one and ask: what would need to happen in year one to get there?
Block an hour this week to take the first step. The goal isn’t a perfect plan. It’s a direction and a start.
Want a full week of these? Try the free 7-day founder fitness challenge →
deal breakdown
Want to move to Hawaii and make $5M per year? This might be the deal for you 👇
see how your business would score → take the free Exit Audit
my plugs
Schedule a confidential call to discuss selling your business.
Book your free Exit Audit: We guarantee we’ll find hidden profit in your business. Start here →
Create your Buyer Profile: Unlock better deal flow by creating a free profile on Breakwater’s deal portal HERE
Subscribe to my YouTube Channel
every second counts