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Why Your Business Shares Might Not Be Suitable for the Lifetime Capital Gains Exemption

Lydia has been an excavator operator for a long time.

She’s more than that, now – she’s an entrepreneur. Her business started as a sole proprietorship one-woman show, growing slowly but surely into the enterprise it is today. She hired slowly, adding first an apprentice, then two apprentices, then a lead hand. Once she invested into equipment and machinery, she made the smart move to incorporate to protect herself against liability.

Lydia’s lawyer and accountant worked together and encouraged her to not only incorporate her business operations (OpCo), but to set up a holding company (HoldCo) as well. She understood that the HoldCo would provide another layer of liability protection, and the accountant had made recommendations about the ownership of the shares that Lydia agreed to, but she later found the specifics difficult to recall. The OpCo issued 100 common shares and were owned by Holdco.  Lydia in turn owned 100 common shares of HoldCo.

After several years in business, Lydia looked around herself to find she had built a thriving business. She had a large team, several machines, and a repeatable process that made her salespeople successful and her customers satisfied. Her business had a great reputation in the community, her staff were happy and so was she.

But entrepreneurship is tough, with long hours and high stress. Lydia started thinking about what the future would look like if she was able to sell the business. How could she ensure her 10-20-year plan compensated her for all her hard work and sweat equity? She started talking to her community of entrepreneurial peers for their insights, and around the dinner table, Lydia learned about the Lifetime Capital Gains Exemption (LCGE) for the first time.

“My accountant explained it to me like this,” her friend Joe stated, refilling her glass of wine. “As incorporated business owners in Canada, we are entitled to almost $1 million (2023 – $971,190) in tax-free gains from the sale of my shares. There are lots of special rules to make sure the shares qualify for the LCGE, but it’s one of many excellent incentives to incorporating a business. It’s something I’m counting on when I sell.”

“That’s right,” noted Caroline, from across the table, “it’s roughly $970,000. I’m expecting my clothing corporation shares to sell for $2 million within the year, and because it’s a Qualified Small Business Corporation (QSBC), I’ll only be taxed on about $1 million of capital gains. It’s an amazing tax benefit – you should talk to your financial planner about it!”

Lydia sent Hannah, her financial planner, an excited email the next morning requesting a meeting to make sure her financial plan included a provision for the LCGE.

Hannah and Lydia met two weeks later.

“It’s so great to meet with you, Lydia!” bubbled Hannah, “I’m so excited to talk about this interesting bit of tax planning. I hope you’re ready to learn.”

“I’m ready! I’m ready to learn how much tax-free money I’ll get when I sell the company shares,” said Lydia, equally exuberant.

“I don’t want to burst your bubble, but your share structure isn’t set up to take advantage of the LCGE. Your OpCo is owned by your HoldCo. If you were to sell the business, your HoldCo would be the vendor.”

“I don’t see the issue,” frowned Lydia. “What does it matter?”

“Holding companies aren’t people, and only individuals can claim the LCGE. That means the gain would be fully taxable in your HoldCo with no capital gains exemption.”

“Wait!” Lydia interrupted. “I am devastated. Did I receive good advice? This could cost me hundreds of thousands of dollars!”

“It’s completely normal to feel that way, Lydia, and anyone would feel that way in your position – but I do think it was good advice. In fact, I think your accountant was likely very experienced in working with businesses like yours. Service businesses like your excavating company are very rarely bought via a share sale, rather their assets are sold – and which are owned by the corporation. A share sale is how individuals benefit from the LCGE – there is a difference between the investment into the business and the sale price, which results in a capital gain. Often, with small businesses, the gain can be in the millions when their business is purchased, and those millions would be considered taxable income.

The LCGE “exempts” about $970,000 of gains from being taxed, so that amount is earned completely tax-free, subject to the Alternative Minimum Tax, which we can discuss later. Anything above and beyond that is taxable as a capital gain,” Hannah explained.

“Purchasing a company’s shares means purchasing ownership of everything related to the company, including potential future liabilities,” Hannah continued, “even if the liability was incurred before the new shareholders owned the shares, and that’s a risk few buyers are willing to take. Would you be willing to take on the liability of another company that you had no control over? Probably not. More commonly, it’s the assets of a service company that are purchased individually on their own – like the excavators, the client list, the shop, etcetera. There’s a profit and gain on that for sure, but since it’s not a share sale, there’s no LCGE.”

“Let me make sure I’m understanding correctly. You’re saying that even though the LCGE exists, it may not be a good fit for me and my business, given the type of business I’m in?” clarified Lydia.

“It’s a simplified explanation, but yes! There are other potentially suitable arrangements we could consider, like a hybrid sale. In that case, there’s an asset sale as well as share sale to take advantage of the LCGE. But given you’re at least 10 years away from the sale, there’s lots of time to restructure your OpCo and HoldCo to claim the LCGE on future growth, if it was needed That means that what you’ve done in the past isn’t always set in stone, and we’ll continue to regularly re-evaluate to make sure the structure aligns with your goals. Plus, I think your accountant was clever to structure the shares this way for now, as all the income and value accrues to your HoldCo, which for now allows you to control the timing of the personal income distributions.”

“Okay… I’m relieved. A bit bummed, but relieved to hear you all have my back with a good understanding of my financial situation. I’m bummed that Joe and Caroline’s businesses have better tax advantages than mine, but there’s nothing I can do about that – excavating was the business I built. I’m still glad we had our meeting – I learned a lot about my share structure, taxes and capital gains that I didn’t really understand before. I was so young when I set up the company – I didn’t realize what a success it would turn out to be, so I didn’t care about any of this stuff,” said Lydia, feeling satisfied.

“I love your attitude, Lydia! That’s one of the reasons I’ve always loved working with you – your positive attitude and outlook on life is an inspiration to me,” Hannah beamed.

“And your expert guidance, clear explanations of hard topics, and way of making me feel better about a tough situation is why I’ve always loved working with you,” Lydia replied.

Lydia left the office that day feeling calm. As she drove back to the shop, she had peace of mind, knowing that her financial team had her back, and taught her enough to share some education of her own the next time she, Joe and Caroline met to talk shop around the dinner table.

The information contained herein has been provided for illustrative purposes only. The information does not provide financial, legal, tax or investment advice. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made on the basis of the information provided in this document. Wellington-Altus Private Wealth (“WAPW”) does not assume any liability for any loss that may result from the reliance by any person upon any such information or opinions.  WAPW is a member of the Canadian Investor Protection Fund and is regulated by the Investment Industry Regulatory Organization of Canada.

© 2023, Wellington-Altus Private Wealth Inc.


The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. 

Amy Sweeney



Amy was born and raised in Squamish, is David’s oldest daughter and now the newest member of the Sweeney Bride team. Many may recognize her as she has worked periodically for the team for over 20 years. For the past five years, she has gained administrative experience and more running her own business as a Kinesiologist after completing a bachelor’s degree in Kinesiology at the University of British Columbia in 2016. Now, Amy is officially ready to join the finance industry. Currently residing in North Vancouver, Amy spends all her “free” time raising Dave’s two wonderful grandchildren.
Liam Hill


Associate Investment Advisor

Originally from Sydney, Australia, Liam moved to the Sea to Sky region in 2013, leaving the beaches behind to embrace the mountains. He hasn’t looked back since and enjoys exploring the wilderness by both land and sea.

Liam’s unique strength lies in his capacity to adapt and fine-tune strategies to match the ever-changing financial world. He’s a passionate advocate for adaptability and flexibility, believing these traits are crucial for securing financial well-being.

Liam holds the Canadian Securities Course qualification and is currently pursuing the Chartered Investment Manager (CIM) designation.

He shares his industry knowledge and business skills to empower individuals, families, and businesses on their path to financial success.

Liam is committed to educating our clients about the financial services industry and helping them make the most of available resources to achieve prosperity.


Administrative Assistant

Sharon worked for Sweeney Bride from 2014 to 2016 and recently rejoined the team as an Administrative Assistant in 2021. She has years of administrative experience in a variety of industries including working in legal and accounting firms. She enjoys being detailed, organized and efficient. When not hard at work, she enjoys exploring the great outdoors with her dogs, playing co-operative strategy board games and relaxing while sipping a nice Craft beer.

Carrie Freitag


Administrative Assistant

Carrie is the newest member of our team and is our Administrative Assistant. She has previous industry and administrative experience and her fascination with the finance industry is rapidly growing. Carrie moved to BC in 1994 from Ontario and never looked back. While not working she loves hanging out with her two kids, awesome cat Leo, and enjoys a competitive game of 21, and her gardens.

Katie Norton



Katie is a Business Administration graduate who joined the Sweeney Bride team in 2016. She takes care of on-boarding as well as managing account administration for our existing clients. She works hard to ensure the clients feel supported throughout the on-boarding process and is always available to answer questions.

A BC resident since 1997, Katie and her husband moved to Squamish to raise their two girls. They enjoy all of the outdoor activities and natural beauty that Squamish has to offer.

Liz Woodsworth


Office Manager

Liz joined the Sweeney Bride team in 2015 as office manager. She is the gatekeeper in the office and is the face that greets you as you come through the door. If she can’t help you, she will ensure you speak with someone who can. Liz is a long-time Squamish local; when not in the office she spends her days soaking up all that this town has to offer while chasing her two active boys. Liz brings her valuable organizational skills and enthusiastic attitude to the team. 

Janet Bride


CFP®, CIM® | Senior Wealth Advisor

Janet Bride is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 15 years’ experience in the Industry Janet holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Janet grew up in Ontario and moved out to beautiful British Columbia in 1995 with her husband, Paul, who is an adventure travel photographer. Her passion is to travel the world. Always interested in exploring different cultures and landscapes, she is grateful to have traveled to over 50 countries across 6 continents. She also enjoys continuous learning, spontaneous adventures with family and friends, and an active lifestyle in the Sea to Sky. Janet is proud to be a Big Brothers Big Sisters Alumni member since 2004.

She is highly motivated by helping people reach their financial dreams by creating comprehensive financial plans for individuals & families. While using a holistic approach to wealth management, she specializes in tax strategies and her goal is to encourage savings and help build our client’s wealth for a healthy and prosperous future.



CFP®, CIM® | Senior Wealth Advisor

Dave Sweeney is a Senior Wealth Advisor at Wellington-Altus Private Wealth and co-founder of the Sweeney Bride Strategic Wealth Advisory team.

With over 31 years’ experience in the Industry Dave holds the Chartered Investment Manager (CIM®), CERTIFIED FINANCIAL PLANNER®, and Elder Planning Counselor (EPC) designations and is also Insurance licensed.

Dave has lived in Squamish for most of his life. Married to his wife Donna, since 1987, they proudly have 3 lovely daughters, Amy, Danielle and Jamie. With his time in Squamish, it has allowed him an opportunity to become involved in many valuable groups.

Dave is a retired Captain of Squamish Fire Rescue after 35 years of service. Another passion was sports and he has been a coach for Squamish Youth Soccer Association where he dedicated 10 years to coaching girls Rep teams. Additionally, he is a former member and Treasurer of the Sea to Sky Community Services Board. Dave is a frequent contributor to Mountain FM’s Mountain Monitor, providing general advice and financial commentary.

Dave continues his volunteer work as Treasurer for both the Squamish Hospital Foundation and the Squamish Downtown Business Improvement Association. He is also a sitting Board member of the Squamish Community Foundation.

Professionally, Dave started his Financial Planning practice in 1994. After living through both his parents’ demise and witnessing what a lack of understanding they had, he realized what sound planning techniques could do to ensure that an untimely death did not destroy one’s lifetime work. For over 20 years, he has made it his passion to assist others in not facing the same plight.