Canada's outdated capital gains policies are driving entrepreneurs and investors away. We need competitive tax reform to keep talent and investment here, building the businesses of tomorrow. Today, Canada has two policies to encourage builders to start businesses the Lifetime Capital Gains Exemption (LCGE) and a proposed Canadian Entrepreneur's Incentive (CEI). Together, these mean that instead of paying taxes on half their profits, business owners might only pay on one-third, or sometimes nothing at all—but only up to $3.25 million. But, these policies simply can’t compete with the US. The USA’s Qualified Small Business Stock (QSBS) lets entrepreneurs avoid taxes on up to $15 million in profits or ten times their original investment. That's five times more than Canada's maximum. What's more the QSBS excludes fewer categories of company and can be used per business rather than over the lifetime of a single individual. This means repeat entrepreneurs in Canada, who have a higher chance of building successful businesses are discouraged from trying again. While, entrepreneurs, early employees, and investors in the US can use the QSBS again and again for subsequent companies. The good news is that for the largest exits the gap between Canada and the US decreases due to a more competitive basic capital gains inclusion rate in Canada. This means that if we match the QSBS’s capital gains limit and exclusions it could actually give the Canadian policy an edge driving more investment in the country and supercharging our SMB ecosystem. However, if we leave the policy as it stands right now companies can never get started because investors and entrepreneurs are scared away. If we want to keep our entrepreneurs, Canada’s capital gains policies must become competitive with US policies. You can read the full memo at the link below: