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DEDUCTIONAll of Canada

Worker Co-operative Capital Gains Exemption

Last verified: June 2026

A business owner who sells the shares of their company to a qualifying worker co-operative can exempt up to $10 million of capital gains from tax. The sale must meet a strict definition of a qualifying co-operative conversion, including arm's-length dealing and the buyer being a newly formed worker co-op. A capital gains reserve of up to 10 years is also available so the seller can spread the gain while the co-op funds the purchase. Originally set to expire at the end of 2026, the measure was made permanent in the spring 2026 federal economic update.

See if I qualifyOfficial page
Estimated value
Up to $10,000,000 in capital gains exempted from tax
Approval likelihood
Medium
Ready to apply score
70/100
Documents needed
5

Eligibility

  • Business types:incorporated
  • Industries:All industries
  • Provinces:All of Canada

What you'll need

  • Share purchase agreement showing sale to a worker co-operative
  • Joint CRA election filed by buyer and seller(s)
  • Worker co-op incorporation documents and bylaws
  • Valuation supporting the active-business asset test
  • Records showing the seller's active engagement in the business

How to apply

  1. 1Confirm the buyer qualifies as a worker co-operative under the Income Tax Act
  2. 2Structure the sale to meet the qualifying co-operative conversion rules
  3. 3File the joint election with CRA by the filing deadline
  4. 4Track the 10-year reserve and avoid disqualifying events post-sale
Deadline:Ongoing (made permanent in spring 2026 economic update)

Is your business a fit for Worker Co-operative Capital Gains Exemption?

Take the 3-minute quiz to find out, and see every other Canadian program you qualify for at the same time.

Check my eligibility

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A monthly digest

New programs, in your inbox.

We are in beta. Drop your email and we will write when the first digest is ready. Monthly cadence, easy unsubscribe.

Deductly CA

Every Canadian grant, tax credit, and deduction your business qualifies for. In one ranked list.

Start the assessment
Product
  • Eligibility quiz
  • All programs
  • Watch (live changes)
  • The funding journey
  • When to apply
  • Stackability map
  • Document checklist
  • Calculators
  • Tracker
  • Learn
  • Pricing
Resources
  • For accountants
  • Public API
  • RSS feed
  • What's new
  • Roadmap
  • Press
  • vs ChatGPT
  • vs Benefits Finder
By province
  • Ontario
  • British Columbia
  • Alberta
  • Quebec
  • Manitoba
  • Saskatchewan
By industry
  • Technology & Software
  • Manufacturing
  • Retail & E-commerce
  • Food & Beverage
  • Professional Services
  • Creative & Media
For
Women entrepreneursNewcomersIndigenous businessYouth foundersBlack entrepreneursFirst-hire employers
Recent guides
Deductions · 8 min

Every deduction Canadian small businesses miss

Grants · 10 min

8 grants every Canadian founder should know about

Deductions · 7 min

The Small Business Deduction, fully explained

© 2026 DeductlyPrivacyTermsAboutFrançaisContact
All systems operational

Deductly is a discovery tool, not a tax filer. Information is provided for educational purposes. Always confirm program details and eligibility with a qualified Canadian accountant before applying or claiming any benefit.