Business leaders want capital gains deferral to keep money in Canadian firms

TORONTO — Canadian business leaders are calling on the federal government to reform tax policies in hopes of bolstering investments in domestic firms.

More than 150 investors and executives signed a letter sent to Finance Minister François-Philippe Champagne on Tuesday, asking him to consider two policies they claim will bolster entrepreneurship in Canada.

The first encourages the country to adopt a program akin to the U.S. qualified small business stock incentive, which allows capital gains from qualified small business stocks to be excluded from federal tax.

The second proposes allowing more entrepreneurs and investors to defer paying some capital gains taxes when proceeds from some domestic business transactions are reinvested in another homegrown venture.

Benjamin Bergen, chief executive of one of the letter’s orchestrators the Canadian Venture Capital and Private Equity Association, said signatories feel deferring but not eliminating the tax would incentivize people who have built successful businesses to put their money to work again rather than take it out of the country, possibly to the U.S.

“This doesn’t impact a tremendous amount of people, but it impacts entrepreneurs and people who are willing to take big risks and it’s in those big risks that you get companies of the future,” he said.

“That is how you get the Googles, the Amazons, the Facebooks, these huge tech firms … so we want to create an environment where we keep individuals in the country who are willing to take big risks on themselves, on the country.”

Bergen’s organization put the letter together with the Council of Canadian Innovators.

Signatories include Dayforce chief executive David Ossip, Koho Financial Inc. founder Daniel Eberhard, Borrowell co-founder Andrew Graham, Two Small Fish Ventures co-founder Eva Lau and Float Financial co-founder Rob Khazzam.

Champagne’s office would not directly comment on the letter.

“While the government regularly reviews the tax system, it would be inappropriate at this time to speculate on any potential or prospective changes to the tax system,” said John Fragos, the minister’s press secretary, in an email.

Jack Mintz, the president’s fellow of the School of Public Policy at the University of Calgary, said the ideas the signatories are pressing for have some drawbacks.

He pointed to a June paper from University of Florida researchers who studied the U.S.’s qualified small business stock incentive.

They found when a tax program like that is available, venture capitalists shift toward investing in riskier ventures, like pre-commercial stage startups and firms carrying pre-existing debt.

Venture capitalists also become more likely to invest across state lines, and provide a company’s first funding, contributing to tax-qualified startup investments experiencing higher failure rates and greater funding gaps.

“You’re basically subsidizing risk,” Mintz said, summarizing some of the paper.

But the policy isn’t all bad. He said the research has also found that the U.S. tax incentives on small business stocks also help companies achieve higher valuations and makes them more likely to reach unicorn status.

Unicorn status is derived when a startup lands a valuation exceeding $1 billion.

“So whether (the signatories’ proposed policies are) a good or a bad thing, I think depends on how you look at these things,” Mintz said.

This report by The Canadian Press was first published Oct. 6, 2026.

Tara Deschamps, The Canadian Press