The short answer
In a share sale, you sell your shares in the company, and a gain on qualified small business corporation shares can use the lifetime capital gains exemption. The Canada Revenue Agency's 2026 table puts the limit at $1.275 million. In an asset sale, the company sells what it owns. Your accountant works out which leaves more with you.
Shares or assets? See what your sale could look like.
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What is the difference between a share sale and an asset sale?
In a share sale you sell your shares in the company, and the company carries on under its new owner. In an asset sale the company sells what it owns, such as equipment, stock and goodwill.
| Topic | Share sale | Asset sale |
|---|---|---|
| Who sells | You, the shareholder | The company |
| Lifetime capital gains exemption | Can apply to a gain on qualified small business corporation shares | The exemption is written for shares and for farm or fishing property, and the company is the seller, so ask your accountant how it fits |
| PST in BC | Does not apply to shares of a business | Applies to taxable goods such as equipment, not to goodwill |
| A licence from Consumer Protection BC | Fill out a notice of change form, with documents from BC Registry Services and criminal record checks for new officers or shareholders | Notify it in writing and submit a new licence application, because licences are not transferable from one company to another |
| Your employees | In BC and Alberta, their length of service carries over to the buyer in either kind of sale | |
Which one leaves more money with me?
It depends on your numbers, and your accountant works it out with the figures in front of them. Three things pull in different directions.
- The exemption favours shares. If your shares qualify, the lifetime capital gains exemption can shelter part or all of your gain.
- Buyers often favour assets. BDC says buyers may want to purchase assets because of the tax benefits it gives them.
- An asset sale adds its own tax questions. The CRA says you may have a recapture or a terminal loss of capital cost allowance on the sale of your assets.
So the two sides often want different structures, and the structure and the price get settled together. Talk to your accountant before you accept an offer, because the structure can change what you keep.
Your lawyer papers the deal and your accountant advises on tax. Both are yours to choose.
What is the lifetime capital gains exemption in 2026?
The Canada Revenue Agency's 2026 table puts the limit at $1.275 million. Your accountant tells you the figure for the year you sell.
| Year | Limit | Where it is stated |
|---|---|---|
| 2025 | $1,250,000 | Canada Revenue Agency, line 25400, page dated 5 February 2026 |
| 2026 | $1.275 million | Canada Revenue Agency, 2026 indexation table, page dated 12 March 2026 |
The exemption lets an individual shelter a gain on qualified small business corporation shares and on qualified farm or fishing property. The CRA says the most you can deduct for 2025 is $625,000, which is 50% of $1,250,000. The federal government had proposed raising the share of a gain that is taxed, and has cancelled the increase.
The CRA's line 25400 page still shows the 2025 figure of $1,250,000, which is why you may see two numbers online. The CRA's 2026 table shows $1.275 million.
Not sure which structure fits? Start with your plan, then bring it to your accountant.
Get my free sale planDo my shares qualify?
Your accountant decides, using the CRA's tests. In plain terms, the CRA says a share is a qualified small business corporation share when all three of these hold. These are the CRA's own plain explanations, not legal definitions.
- At the time of the sale. The share is in a small business corporation, and you, your spouse or common law partner, or a partnership you belong to owned it. A small business corporation is a Canadian controlled private corporation with all or most (90% or more) of the fair market value of its assets used mainly in an active business carried on primarily in Canada, or held as shares or debts of connected small business corporations.
- Through the 24 months before the sale. No one other than you, a partnership you belong to, or a person related to you owned the share.
- Within those 24 months, while you or someone related held it. The company was a Canadian controlled private corporation, with more than 50% of the fair market value of its assets used mainly in an active business carried on primarily in Canada, or held as certain shares or debts of connected corporations.
Why do buyers often ask for the assets?
BDC says buyers may want to purchase assets because of the tax benefits it gives them. That is the buyer's side of the table.
Your side may be the exemption, if your shares qualify. Neither wish is wrong. A structure that suits the buyer can cost the seller, which is why the structure and the price are settled together.
I run a sole proprietorship. What can I sell?
The assets of the business. A sole proprietorship is an unincorporated business owned by one individual, and the CRA says the owner does not have separate legal status from the business. There is no company, so there are no shares to sell.
You can still sell the business as a whole: the equipment, the stock and the goodwill. The CRA's GST/HST election can apply when you sell the business you carried on and the buyer acquires at least 90% of the property needed to carry it on. The exemption is written for qualified small business corporation shares and for qualified farm or fishing property, so ask your accountant what applies to your sale.
What about GST, and PST in BC?
GST is federal, and BC adds PST. Alberta has no sales tax.
- GST/HST. If you sell a whole business, you and the buyer may be able to elect that no GST/HST is payable on the sale, using Form GST44. The election cannot be made if you sell only one or more assets of the business, or if you are a registrant and the buyer is not.
- PST in BC. In an asset sale, PST applies to the assets that are taxable goods or software, such as vehicles and shop equipment. It does not apply to goodwill, and it does not apply to shares of a business.
- Alberta. The Government of Alberta says Alberta has no sales tax.
Our guides on selling in Alberta and in British Columbia go through each province's rules.
Questions owners ask
What is the lifetime capital gains exemption for 2026?
Who can use the lifetime capital gains exemption?
Why do buyers ask for assets?
Can a sole proprietor sell shares?
Does PST apply to a share sale in BC?
Shares or assets, the price starts from what the business earns.
Get my free sale planSources
- Line 25400, Capital gains deduction, Canada Revenue Agency, page dated 5 February 2026, read 21 October 2026.
- Government of Canada introduces new Productivity Mega Deduction to boost Canada's advantage as the most competitive G7 country for new business investment, Finance Canada, dated 15 September 2026, read 21 October 2026.
- Update on the Canada Revenue Agency's administration of the proposed capital gains taxation changes, Canada Revenue Agency, page dated 31 January 2025, read 21 October 2026.
- Definitions for capital gains, Canada Revenue Agency, page dated 5 February 2026, read 21 October 2026.
- Share transfers: How to minimize your taxes, BDC, updated 4 October 2022, read 21 October 2026.
- Selling a business, Canada Revenue Agency, page dated 27 July 2026, read 21 October 2026.
- Sole proprietorship, Canada Revenue Agency, page dated 17 August 2026, read 21 October 2026.
- Buying and selling a business, Government of British Columbia, PST, last updated 31 July 2026, read 21 October 2026.
- Selling your business?, Consumer Protection BC, read 21 October 2026.
- Employment Standards Act, section 97, Sale of business, BC Laws, King's Printer, act current to 13 October 2026, read 21 October 2026.
- Employment standards: termination and layoff, Government of Alberta, read 21 October 2026.
- About Tax and Revenue Administration, Government of Alberta, read 21 October 2026.
- Adjustment of personal income tax and benefit amounts, Canada Revenue Agency, page dated 12 March 2026, read 21 October 2026.
Who publishes this
Succession Market publishes this guide from Kelowna, British Columbia. We help owners navigate the sale of their business.
This guide is general information, not tax or legal advice for a particular sale. Your lawyer papers the deal and your accountant advises on tax. Both are yours to choose.