Small business investment rollover: more time to reinvest
If you sell shares of a small Canadian business and reinvest in another, you can defer the gain. Budget 2026 proposes giving you much longer to reinvest.
Quick answer: For dispositions from 1 January 2027, Budget 2026 proposes that sale proceeds can be reinvested in the year of sale or the following three years to defer the capital gain, or five years under a SAFE-type agreement. The shares must have been held at least 185 days, the asset test during ownership is relaxed to “primarily” (over 50%), and interest at the prescribed rate applies to any gain deferred but not reinvested.
Example
Tom sells shares in a small manufacturer in 2027 for a $300,000 gain and reinvests the proceeds in another eligible small business in 2029. Under the proposal the reinvestment is within the window, so the gain can be deferred until he sells the new shares. If he reinvested only part, interest would be charged on the deferred amount he did not reinvest.
Gains you want to eliminate rather than defer may suit the Canada Growth Incentive or the lifetime capital gains exemption instead.
Whether this applies to you depends on your year-end and structure; ask about your own situation and a CPA replies by email, usually the same business day, free.
Common questions
How long do I have to reinvest?+
When does it start?+
Where this comes from
Budget 2026 was tabled on 5 November 2026. Figures on this page are from:
- Thor — 2026 Federal Budget: key tax measures
- BLG — Federal Budget 2026: tax measures
- RBC Wealth Management — Federal budget 2026 overview
General information, not tax advice. Budget measures are proposals until enacted and can change. Before deciding anything, send an enquiry.