CANADIAN ENTREPRENEURS' INCENTIVE: Advantages of Incorporation
Contact Neufeld Legal for your incorporation legal work at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com
The Canadian Entrepreneurs' Incentive (CEI) is a new tax measure announced by the federal government to support small and medium-sized businesses by offering tax relief on the capital gains realized from the sale of qualifying business shares.The Canadian Entrepreneurs' Incentive provides a significantly lower capital gains inclusion rate (currently proposed to be 33.3% instead of the 66.6% rate for gains over a certain threshold) on up to $2 million of eligible capital gains.
The lifetime limit of $2 million is being phased in progressively, starting at $400,000 in 2025 and increasing by $400,000 each year until the full $2 million is reached in 2029. To qualify, the business and entrepreneur must meet specific criteria, including:
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The business must be a Canadian-Controlled Private Corporation (CCPC).
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The entrepreneur must have a minimum 5% ownership and have been actively engaged in the business for a set period (e.g., at least 3 years since inception).
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Certain industries are excluded (e.g., professional practices like law/medicine, financial services, real estate, hospitality).
The Canadian Entrepreneurs' Incentive works in combination with the Lifetime Capital Gains Exemption (LCGE), which was also recently increased to $1.25 million.
So if you are looking to incorporate a new corporation or deal with the corporate legalities impacting your company, contact our law firm to schedule a confidential consultation with a lawyer experienced in the legal intricacies of business incorporation and commercial business development at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or via email at Chris@NeufeldLegal.com.
