What Changed, What Didn’t, and What It Means for Investors & Small Business Owners in the GTA
Capital gains tax Canada 2026 update guide by Easy Tax Canada, accountants in Mississauga and Brampton
If you delayed selling a property, a business, or an investment portfolio in 2024 or 2025 because of headlines about a capital gains tax hike, you are not alone. Here is where things actually stand for the 2026 tax year, and what it means if you are planning to sell an asset in Mississauga, Brampton, or anywhere else in Canada.
The Short Version
The federal government proposed raising the capital gains inclusion rate from one-half to two-thirds in the 2024 budget. That increase was delayed, then formally cancelled in March 2025. As of the 2026 tax year, the inclusion rate remains at 50%, meaning only half of any capital gain you realize is added to your taxable income, exactly as it has been for years.
Infographic showing capital gains inclusion rate stays at 50 percent in 2026, LCGE and threshold figures, Easy Tax Canada
What Did Change: The Lifetime Capital Gains Exemption
While the inclusion rate increase was cancelled, one related change did move forward. The Lifetime Capital Gains Exemption (LCGE) on qualified small business corporation shares and qualified farming and fishing property increased to $1.25 million, up from roughly $1.02 million previously. For business owners planning an eventual sale or succession, this is a meaningful increase in how much can be sheltered from tax entirely.
The Canadian Entrepreneurs’ Incentive
A newer benefit, the Canadian Entrepreneurs’ Incentive, is being phased in gradually and reduces the inclusion rate to one-third on eligible capital gains above the LCGE, up to a lifetime maximum that increases by $400,000 each year. Combined with the LCGE, this can meaningfully reduce the tax bill for founders selling qualifying shares. Eligibility rules are specific, so this is worth reviewing with your accountant before a sale closes, not after.
What This Means If You Are Selling in 2026
- Your principal residence remains fully exempt from capital gains tax on sale, this did not change.
- For other property, such as a rental or a cottage, only 50% of the gain is taxable, and this applies regardless of the size of the gain.
- If you paused a planned sale of an investment property or business in the GTA while waiting to see what would happen, there is generally no remaining tax reason to keep waiting under current rules.
- Corporations and trusts also continue to use the 50% inclusion rate, unless future legislation changes this again.
| Because capital gains rules have shifted twice in two years, always confirm the rate in effect at the time you file, rather than relying on older headlines. Rules that applied in 2024 do not necessarily apply to your 2026 return. |
Practical Tax Planning for GTA Investors and Business Owners
With the 50% inclusion rate confirmed for 2026, several strategies remain worth revisiting: timing the sale of appreciated assets around your income for the year, using capital losses to offset gains, and structuring a business sale to make the most of the increased LCGE. For incorporated clients in Mississauga and Brampton, we also review whether holding investments personally or inside a corporation makes more sense given the current rules.
Final Thoughts
Two years of proposed changes created real uncertainty for Canadian investors and business owners. With the increase now cancelled and the inclusion rate confirmed at 50% for 2026, this is a good time to revisit any decisions you postponed and build a clear plan for the rest of the year.
| Need Help With This? Talk to Easy Tax Canada. Our team is led by a former CRA Auditor and Collections Officer with over 15 years of experience, backed by CPAs who know the Canadian tax system inside and out. We help individuals, self-employed professionals, and small businesses across Mississauga, Brampton, and the Greater Toronto Area file accurately, plan ahead, and stay CRA-compliant year-round. Visit easytaxcanada.com to book a consultation or explore our blog for more tax guidance. |