Canadian business leaders call for expanded tax breaks to compete
Over 100 Canadian investors, entrepreneurs, and company leaders have urged the federal government to broaden tax relief for business founders and investors, warning that existing policies lag behind American offerings and may accelerate capital flight to the United States.
The proposal, released Tuesday, demands two major adjustments: a tax exemption on up to $15 million in gains from selling company shares, and the ability to postpone taxes if those proceeds fund another Canadian business. The changes would eliminate current ownership thresholds that currently restrict eligibility.
Six industry associations are spearheading the effort, including the Canadian Venture Capital and Private Equity Association and the National Angel Capital Organization. Among the signatories are Maverix Private Equity founder John Ruffolo, Intrepid Growth Partners president and co-founder Mark Shulgan, Ripple Ventures founder Matt Cohen, and Jacques Bernier, managing partner of Teralys Capital. Borrowell CEO and co-founder Andrew Graham also signed, as did Magnet Forensics CEO Adam Belsher, AlayaCare CEO Adrian Schauer, and Jobber CEO Sam Pillar. The letter was directed to Finance Minister François-Philippe Champagne.
This latest push follows the government’s announcement of a so-called Productivity Mega Deduction at the Canada Investment Summit last month. That scheme aims to attract more business investment to Canada by letting companies deduct the full cost of most new equipment and other business assets from their taxable income right away, rather than over several years. The incentive for entrepreneurs proposed in Tuesday’s letter would complement that scheme by encouraging support for younger companies at a riskier stage, when they are still developing their products and establishing a market.
Read Also: Cohere’s North 2 AI Platform Adds Third-Party Model Integration
Claudio Rojas, CEO of the National Angel Capital Organization, emphasized that the current tax structure forces founders and employees to factor in after-tax returns when choosing where to operate. “When entrepreneurs and employees in a startup are taking the risk of starting a business, they’re mindful of the after-tax dimensions,” he said, “and so it’s critical that we are a competitive regime to the U.S.”
The requested tax relief mirrors the U.S. Qualified Small Business Stock program, which waives federal capital gains taxes on qualifying share sales after a holding period. Canada had previously introduced the Canadian Entrepreneurs’ Incentive in the 2024 budget—a reduction of taxable profits from 50% to one-third on a $2 million lifetime limit. The government scrapped the tax break, however, when it cancelled the planned capital gains changes amid intense backlash from the business community, including from the Council of Canadian Innovators, which Bergen led at the time.
Benjamin Bergen, CEO of the Canadian Venture Capital and Private Equity Association, noted that scrapping the incentive left Canada trailing U.S. support for founders and investors. He said the timing is now right to change that, pointing to renewed interest in Canada from investors and business leaders. “We’re in a bit of a Goldilocks moment,” he said. “If investors are going to look at opportunities, if builders are going to create here… we need to make sure that we’ve implemented the policies that lead to that transformation.”
