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CANADA

Canada's budget proposes a C$15m capital gains break, but only for firms operating mainly in Canada

Canada's Budget 2026 would exempt up to C$15m in start-up capital gains if the firm operates mainly in Canada for two years, ease foreign-asset reporting and cut withholding on non-resident corporations' property sales.

Citi Sighs5 MIN
Parliament buildings in Ottawa behind green trees under a cloudy sky

Parliament, Ottawa. Photo: Shubham Sharan / Unsplash

By the Citi Sighs Intelligence Desk — Toronto, November 7, 2026

TORONTO — Canada's Budget 2026, tabled Nov. 5, proposes a tax exemption on up to C$15 million in capital gains from eligible start-up investments, and a wider research tax credit. It also lists C$6.6 billion for trade diversification and infrastructure, with an aim to make exports to markets other than the U.S. twice as large by the end of 2035.

For founders building between Canada, Ghana and Nigeria, the fine print decides who gains. According to KPMG's budget summary, the new exemption requires the business to operate primarily in Canada for two years after the shares are issued. Separate changes raise the bar for reporting foreign assets and cut the tax a buyer must hold back when a non-resident corporation sells certain Canadian property. The tax measures are proposals that still need legislation.

What changed

  • Canada Growth Incentive. Up to C$15 million of capital gains per qualifying individual, per business, on qualifying shares issued on or after Nov. 5, 2026 and before 2037. The shares must be held for 36 months before sale, and the business must be carried on primarily in Canada for 24 consecutive months after issuance, among other conditions (KPMG). PwC adds that the company must be a Canadian-controlled private corporation (CCPC) when the shares are issued.
  • Research credit (SR&ED). Eligible spending would include work to get products certified by regulators and the cost of obtaining and keeping patents and other IP protection, for tax years beginning on or after Nov. 5, 2026 (KPMG). Finance Canada budgets C$930 million to extend SR&ED to certain commercialisation costs.
  • Foreign asset reporting (Form T1135). Filing would be required only when specified foreign property costs more than C$200,000, up from C$100,000, and simplified reporting would cover holdings under C$500,000, up from C$250,000, for tax years ending after 2026 (KPMG).
  • Withholding on Canadian property sales. Where the vendor is a non-resident corporation, the buyer's required holdback would fall from 25% to 15% of the price for most taxable Canadian property, and from 50% to 30% for specified property, for sales on or after Jan. 1, 2027 (PwC; KPMG lists the change under corporate vendors).
  • Fiscal frame. KPMG reports a projected 2026-27 deficit of C$62.3 billion and no changes to personal or corporate tax rates.

What it means in practice

For a Canadian start-up with a subsidiary in Accra or Lagos, the growth incentive turns on whether the Canadian company carries on business "primarily in Canada" for two years. The summaries we reviewed do not say how activity in a foreign subsidiary counts towards that test.

The SR&ED change matters to Canadian product firms that pay for certification testing or patent work. KPMG's summary does not say whether certification for a foreign regulator, such as Ghana's or Nigeria's, qualifies.

The T1135 change cuts paperwork. A Canadian resident whose specified foreign property — for example, bank accounts or shares held in Ghana or Nigeria — costs between C$100,000 and C$200,000 would no longer have to file, starting with tax years ending after 2026.

The withholding cut is aimed at the other direction of the corridor. A Ghanaian or Nigerian company selling Canadian real estate or private shares that count as taxable Canadian property would see less of the price held back at closing. The summaries describe a change to the amount withheld, not to the tax rate owed.

Context

The budget does not mention Africa, Ghana or Nigeria in the Finance Canada release, the key-measures page or the budget sections we could read. Canada and Ghana signed a letter of intent on trade, mining, AI and aviation in October.

Ghana's Finance Minister Cassiel Ato Forson presents the 2027 budget to Parliament on Thursday, Nov. 12, Graphic Online reports. In Nigeria, the central bank has just set a ₦15 billion capital bar and a local-licence rule for foreign-currency stablecoins, as we reported on Nov. 6.

What to watch next

  • Implementing legislation for the tax measures. No date has been set in the sources we reviewed.
  • Draft rules for the growth incentive; KPMG says Finance will propose rules later to stop the C$15 million limit being multiplied.
  • Consultations: comments on transferring losses within corporate groups are due Jan. 8, 2027, and on Common Reporting Standard changes by Dec. 31, 2026 (KPMG).
  • Ghana's 2027 budget on Nov. 12.

The case for and against

For: the exemption and the wider research credit reward founders who keep their company, staff and IP in Canada. The T1135 change lifts a filing burden off many diaspora savers. The lower holdback eases cash flow for West African investors selling Canadian assets.

Against: a test built around operating primarily in Canada may leave out start-ups whose customers and teams are mostly in Ghana or Nigeria. The CCPC condition may matter for companies whose founders or backers are outside Canada. The exemption also gives up tax revenue, and its largest benefit goes to those with the largest gains. None of the trade money we could trace is earmarked for Africa, and the tax measures are still proposals. From a Ghanaian or Nigerian view, an incentive that pulls holding companies and IP into Canada could also mean gains are taxed and booked outside the countries where the business earns them.

Citi Sighs analysis — In our view, corridor founders should map where their staff, revenue and IP actually sit before draft legislation lands; whether a structure meets the "primarily in Canada" test is a question for a Canadian tax adviser. If the T1135 change is enacted as proposed, diaspora investors near the old C$100,000 line would file less, starting with the 2027 tax year. Exporters should watch how the C$6.6 billion is allocated: on the documents we reviewed, Africa has no line of its own, so the case for corridor support still has to be made.

What we could not verify

  • We could not open the budget's tax annex directly; tax details rest on the KPMG and PwC summaries.
  • How the "primarily in Canada" test treats activity in foreign subsidiaries, how the CCPC condition applies to companies with non-resident founders, and whether the qualifying individual must live in Canada.
  • Whether certification for foreign regulators counts under the expanded SR&ED rules.
  • Whether any part of the C$6.6 billion is set aside for Africa, and when implementing legislation will be tabled.

Disclosure: Citi Sighs has no commercial relationship with any company or institution named in this article. This article is general information, not tax, legal or investment advice.

CanadaTax PolicyFiscal Policy