Definition
The LCGE allows qualifying Canadian resident individuals to shelter a lifetime total of capital gains realized on qualified small business corporation (QSBC) shares, qualified farm property, and qualified fishing property from income tax. For 2026, the LCGE limit is $1,250,000 for QSBC shares (indexed annually) and the same amount for farm and fishing property. To qualify as a QSBC, a corporation must be a Canadian-controlled private corporation where at least 90% of fair-market-value assets are used in an active business in Canada at disposition and at least 50% were so used throughout the preceding 24 months. The LCGE is cumulative: amounts claimed in prior years reduce the available room in later years. The exemption is claimed on Schedule 3 of the T1 return and on Form T657. Capital gains on publicly traded shares, real estate investment properties, and other assets do not qualify.
Source
Income Tax Act s.110.6; CRA Guide T4037 (Capital Gains)