# What is the lifetime capital gains exemption? · Horizon Answers

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# What is the lifetime capital gains exemption?

Short answer

It is a Canadian tax rule that can shelter part of the gain when you sell shares of a qualifying small business. Your company must meet the tests at the time of sale, and planning takes years.

## What to know

-   It generally applies to share sales, not asset sales.
-   Excess cash or passive assets can disqualify the company.
-   Family members may each be able to claim it with the right structure.

## What to do next

1.  1Ask your tax advisor if your company qualifies today.
2.  2Review your holding structure.
3.  3Start planning at least two years ahead.

Last reviewed September 2026 by the Horizon team. General information, not legal, tax or financial advice.

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