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Sellers want a share sale for the lifetime capital gains exemption; buyers want an asset sale for a fresh cost base. Here is how each is taxed in 2026 and how the price bridges the gap.

Eligible and non-eligible dividends carry different gross-ups, credits and tax rates. In BC a top-bracket shareholder pays about 36.5% on eligible dividends and 48.9% on non-eligible ones.

A capital dividend account lets a private corporation pay the non-taxable half of its capital gains and life insurance proceeds to shareholders completely tax-free, if the T2054 election is filed on time.

The 2026 lifetime capital gains exemption shelters up to $1,275,000 of gains on qualified small business corporation shares, but only if the company passes the 90% and 24-month tests.

If a CCPC group earns more than $50,000 of adjusted aggregate investment income, the $500,000 small business limit starts to shrink and can disappear at $150,000.

When a corporation pays personal expenses or lets a shareholder use company assets privately, the value is generally taxable under the shareholder-benefit rules.

If you take money out of your corporation and do not repay it in time, CRA can include the full shareholder loan in your personal income.

If CRA treats your corporation as a personal services business, you lose the small business deduction, face an extra 5% federal tax, and can deduct only a short list of expenses.