Department of Finance Canada released details on the Canadian Entrepreneurs' Incentive.
The incentive is linked to the increased $1.25 million Lifetime Capital Gains Exemption announced in Budget 2024.
Finance Canada said the incentive, when fully rolled out, would make eligible business owners better off when selling business shares worth up to $6.25 million.
The government proposed reducing the minimum ownership level to 5 per cent and reducing the minimum ownership time to any continuous 24-month period since the business was founded.
The measure was also linked to the incentive to other business-investment measures, including the Venture Capital Catalyst Initiative, SR&ED, and federal investment in artificial intelligence.
Business owners will need to test the shares, ownership level, and ownership history against the final eligibility rules before relying on the capital-gains relief.