Business · Companies · 2 hrs ago
Canadian Senate committee urges tax changes to boost small-business investment
A Canadian Senate committee has urged the federal government to make it easier for small businesses to raise growth capital.
The recommendations address a gap that can leave startups unable to fund expansion, a stage often called the “valley of death.”
The committee wants Ottawa to defer capital-gains taxes when people reinvest sale proceeds in another Canadian small or medium-sized business.
It also recommends extending a tax credit now used in mineral exploration to other industries with high upfront costs, and considering targeted investment tax credits or capital-gains exemptions.
The committee says banks should lend more to startups and share more information about their lending, while large pension funds should invest more in Canadian businesses, including through partnerships.
The committee is urging Ottawa to act promptly, but the recommendations are proposals, not announced government changes.
A Senate committee has urged the federal government to change tax rules and take other steps to improve access to growth capital for small- and medium-sized businesses.
The Senate banking, commerce and economy committee issued its recommendations on Wednesday after studying the issue through much of 2026.
The report proposes deferring capital-gains taxes when proceeds from selling a stake in a Canadian startup are reinvested in another small or medium-sized business.
It also recommends expanding flow-through share tax credits and considering targeted tax credits or capital-gains exemptions.
The committee called for more bank lending and disclosure, greater investment by large pension funds, and federal support for investment vehicles.
- Who
- The Senate committee on banking, commerce and the economy.
- What
- It recommended tax changes and other measures to increase investment and access to capital for small- and medium-sized businesses.
- When
- The report was issued on Wednesday; the article was published on Oct. 14, 2026.
- Where
- Canada.
- Why
- The committee said SMEs need better access to growth capital to scale up and compete globally.
This story does not have two clearly opposing sides.
The committee studied the lack of access to growth capital for small- and medium-sized businesses.
More than 100 businesses, industry groups and executives sent an open letter to Finance Minister François-Philippe Champagne calling for a policy to defer capital-gains taxes when proceeds are reinvested in another SME.
The committee issued its report with recommendations for improving SME access to investment and capital.
- Report length
- 64 pages
- Capital-gains proposal
- Defer tax on proceeds from selling a Canadian startup stake if reinvested in another SME
- Existing tax credit
- Flow-through share tax credit applies to companies involved in mineral exploration
- Open-letter signatories
- More than 100 businesses, industry groups and executives
- Report focus
- Access to growth capital for small- and medium-sized enterprises
What people are saying
Time is of the essence.
Canada’s innovators and entrepreneurs represent the future of our economy. Competitive access to credit and capital is critical to enabling our SMEs to compete globally, both in and from Canada.