Published 2 November 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
Most Ontario dentists sell either the shares of their professional corporation or its assets. A share sale can use the lifetime capital gains exemption, which CRA lists at $1.25 million for 2025, if the shares pass the QSBC tests. The inclusion rate remains one-half after the 2025 cancellation. Purification must be finished more than two years before a sale.
This guide is for Ontario dentists who are thinking about selling their practice in the next few years and want to understand the tax side before they talk price. You will get the current capital gains exemption and inclusion rate, the tests your corporation’s shares must pass, the asset-versus-share choice, and the planning that has to start early. I am a commercial broker, not an accountant or lawyer, so use this to prepare better questions for them.
How is the sale of a dental practice taxed in Canada?
Most Ontario dentists practise through a professional corporation, so a sale usually takes one of two forms:
- Share sale. You sell the shares of your corporation. The gain is yours personally, and if the shares qualify, you may shelter a large part of it with the lifetime capital gains exemption (LCGE).
- Asset sale. Your corporation sells the practice assets, such as goodwill, equipment and patient charts. The corporation pays tax on the sale, and you pay tax again when you take the money out, for example as dividends.
That is why sellers often prefer a share sale and buyers often prefer an asset sale. The final structure is negotiated, and the tax difference is often part of the price. Every number in your own plan should come from your accountant.
What is the lifetime capital gains exemption for 2026?
CRA’s page for line 25400 lists the LCGE at $1,250,000 for 2025, which gives a maximum capital gains deduction of $625,000. CRA still describes it as being under proposed changes, and when the Prime Minister cancelled the capital gains increase on 21 March 2025, his office said the government would maintain the LCGE increase to $1,250,000 and introduce legislation in due course. CRA says the limit is indexed to inflation. The CRA page I checked, last updated 5 February 2026, does not show a 2026 amount, so I am not stating one. Ask your accountant for the figure that will apply in the year you sell.
The exemption belongs to individuals, not corporations. It applies when you personally sell qualified small business corporation shares. It does not shelter a gain your corporation makes by selling its assets.
Is the capital gains inclusion rate still one-half?
Yes, based on the official sources I checked. In March 2025 the federal government cancelled the proposed increase in the inclusion rate from one-half to two-thirds. CRA’s capital gains guide for 2025 works its examples on half of a capital gain being taxable. If you are reading this later in 2027, confirm with your accountant that nothing has changed, because tax rates and rules can change with any budget.
Do my dental corporation shares qualify for the capital gains exemption?
Only if they are qualified small business corporation (QSBC) shares. CRA’s capital gains guide sets out the conditions. In plain English:
- At the time of sale, the corporation must be a small business corporation. CRA defines that as a Canadian-controlled private corporation where all or most (90% or more) of the fair market value of its assets is used mainly in an active business carried on mainly in Canada, or is shares or debt of connected small business corporations.
- For the 24 months before the sale, more than 50% of the fair market value of the corporation’s assets must have met that active-business test.
- For the same 24 months, no one other than you, a partnership you were a member of, or a related person may have owned the shares.
The test that trips up dentists is the first one. Many successful practices build up investments inside the corporation over the years. Stocks, bonds and rental property are not active business assets, and enough of them can push the corporation under the 90% line.
What is purification, and why start two years before you sell?
Purification means moving non-active assets out of the corporation so the shares pass the QSBC tests. BDO’s guide to getting a dental practice ready to sell explains that simply paying the investments out to shareholders creates taxable dividends, so accountants often move them into a second corporation instead, or move the dental business into a new one, which can often be done on a tax-deferred basis. BDO’s key point is timing: because of the 24-month test, purification has to be finished more than two years before the sale and kept in place. BDO also warns that if an owner dies suddenly, there may be no time to fix it.
If you think you might sell within three to five years, ask your accountant now whether your shares would qualify today.
Want a private range for your own practice before you sit down with your accountant? Try the estimator below.
Asset sale vs share sale: which is better for a selling dentist?
| Question | Share sale | Asset sale |
|---|---|---|
| Who sells | You, personally | Your professional corporation |
| Can the LCGE apply | Yes, if the shares are QSBC shares | No, the corporation’s gain is not covered |
| Layers of tax for the seller | Usually one, at the personal level | Tax in the corporation, then again when money is paid out |
| Equipment write-offs claimed in the past | Stay with the corporation the buyer now owns | Can be taxed back as recapture |
| Buyer’s future write-offs | Inherits the corporation’s existing tax values | New, higher tax values on goodwill and equipment |
| Past liabilities | Go with the corporation to the buyer | Generally stay with the seller |
| Who can buy | Voting shares only by an RCDSO member | Any buyer whose structure meets the rules |
Source: CRA capital gains guide (2025); Oral Health, “Shares versus assets” (2005, concepts only; its dollar figures are out of date); O. Reg. 665/05 under Ontario’s Business Corporations Act. Confirm with your accountant and lawyer.
An older Oral Health article on shares versus assets made two points that still hold. Buyers lose future tax deductions in a share purchase, because they inherit the corporation’s low tax values instead of stepping up to the price they paid. And they take on the corporation’s history, including any tax a CRA audit later finds. That is why a share sale is more complex, and why buyers often ask for a lower price, strong indemnities or both. My post on asset sale vs share sale walks through the same trade-off for restaurants, and my guide to what a buyer actually buys in an Ontario dental practice shows the buyer’s side, including HST and staff.
One rule is specific to dentists. Under Ontario Regulation 665/05, every voting share of a dentist corporation must be owned by a member of the RCDSO. If a dental group (DSO) is buying, the offer may be structured differently. Ask your lawyer how the offer is structured and what that does to your tax, and confirm the legal points with your lawyer.
Can my spouse or children use their exemptions on a practice sale?
Possibly, with planning. Ontario’s rules for dentist corporations allow non-voting shares to be owned by a family member of a voting dentist shareholder, defined as a spouse, child or parent, or held in trust for the dentist’s minor children. BDO notes that spouses may be able to use each other’s LCGE, and that adult children’s exemptions may also be used on larger deals, but only with advance planning. The 24-month ownership test means this cannot be set up just before a sale. Your accountant and lawyer need to design it, and the family members need independent advice.
Does alternative minimum tax apply to a large practice sale?
It can. PwC reports that the federal changes to alternative minimum tax (AMT) received royal assent on 20 June 2024. They raised the AMT rate to 20.5% and kept the effective inclusion rate for gains eligible for the LCGE at 30% in the AMT calculation. In practice, a dentist who shelters a large gain with the exemption may still owe some minimum tax in the year of sale. Ask your accountant to run the AMT calculation before you agree on timing and structure.
What is my dental practice worth before tax?
Price comes first, then tax. A 2026 guide on a BMO Nesbitt Burns advisor blog said GTA practices were routinely trading at 130% to 150% of annual revenue, against roughly 80% to 120% in rural and smaller-city markets. My own estimator benchmark, taken from published broker and lender guides, is that GTA dental practices have been trading at roughly 100–150% of annual collections, with large dental groups (DSOs) keeping demand high.
Public sale data is thin. TRREB MLS data (via REALM) for the 12 months to September 2026: dental and medical practices that sold through MLS were small, with a median of about $280,000, and sold at about 85% of asking. Larger GTA practices usually trade privately. That is why I work with a dental-experienced valuator and your accountant on the numbers, and focus my own work on the sale process, the lease and the real estate. You can test a range with my dental practice value estimator.
Can I spread the tax if the buyer pays me over time?
Sometimes. CRA’s capital gains guide explains that when part of the price is paid later, a reserve can let most sellers include the gain in income over up to five years. For qualified small business corporation shares transferred to your child, the period can be up to ten years. A reserve interacts with the LCGE and with AMT, so this is a question for your accountant before you agree to vendor financing.
The biggest tax mistakes I see are about timing, not rates. Dentists start the sale conversation, then learn their corporation holds too many investments to qualify for the exemption, and the two-year clock starts only then. If a sale is anywhere on your five-year horizon, get the QSBC check done this year, keep your lease in good shape, and only then start talking price.
Do not let a buyer’s offer set your structure by default. An asset offer and a share offer at the same headline price can leave you with very different amounts after tax. Have your accountant compare the after-tax proceeds of each offer, and your lawyer review the indemnities, before you sign anything.
What to do next
- Ask your accountant whether your corporation’s shares would qualify as QSBC shares today, and what purification would involve.
- Ask for an estimate of after-tax proceeds under both an asset sale and a share sale, including AMT.
- Have a dental-experienced valuator and your accountant prepare a value range, and check it against the estimator.
- Review your lease for assignment and change-of-control terms, and the remaining term a buyer’s bank will need. My guide to commercial lease clauses in Ontario explains what to look for.
- Book a call with me to plan the sale process and the premises side, with your accountant and lawyer on the same timeline.
Need help with this? Talk to me.
I’m Jatin Dua, Broker of Record at RE/MAX Quantum Realty, and I’m the best agent to do this kind of work for you in Toronto and across the GTA. Over $100 million in GTA sales and 100+ families helped sell. Feel free to contact me any time: call or text 833-330-1925 or email [email protected].
Frequently asked questions
How much tax do you pay when selling a dental practice in Canada?
It depends on the structure. In a share sale, you may shelter part of the gain with the lifetime capital gains exemption if your shares are QSBC shares, and half of any remaining gain is taxable. In an asset sale, your corporation pays tax and you pay again when you withdraw the money. Have your accountant calculate both for your Ontario practice.
What is the lifetime capital gains exemption in 2026?
CRA lists the lifetime capital gains exemption at $1,250,000 for 2025, a maximum deduction of $625,000, and says the limit is indexed to inflation. As of November 2026, the CRA page I checked had not shown a 2026 amount. The government confirmed in March 2025 that it would keep the $1.25 million level. Ask your accountant which figure applies in your sale year.
Can a dentist use the lifetime capital gains exemption?
Yes, if the dentist sells shares of a professional corporation that qualify as qualified small business corporation shares. The corporation must have about 90% or more of its asset value in the active practice at the sale date, more than 50% throughout the prior 24 months, and the shares must meet CRA’s 24-month ownership test. Confirm your position with your accountant.
Is a share sale or asset sale better when selling a dental practice?
For most Ontario sellers, a share sale is better on tax because the lifetime capital gains exemption can apply. Buyers often prefer an asset sale because they get new tax write-offs and avoid the corporation’s past liabilities. The final choice is negotiated, and the tax gap often affects the price. Compare after-tax proceeds of each offer with your accountant.
What is purification of a dental professional corporation?
Purification is moving non-practice assets, such as investment portfolios or rental property, out of the corporation so its shares qualify for the lifetime capital gains exemption. BDO says it should be completed more than two years before a sale because of the 24-month test. It is often done tax-deferred through another corporation. Have your Ontario accountant plan it.
Is the capital gains inclusion rate going up in Canada?
No. On 21 March 2025, the federal government cancelled the proposed increase in the capital gains inclusion rate from one-half to two-thirds. CRA’s 2025 capital gains guide uses a one-half inclusion rate. Tax rules can change in any budget, so confirm the rate with your accountant before you sell a practice in 2027.
Can my spouse own shares in my Ontario dental corporation?
Yes, non-voting shares. Ontario Regulation 665/05 allows non-voting shares of a dentist corporation to be owned by a family member of a voting dentist shareholder, meaning a spouse, child or parent, or held in trust for minor children. Voting shares must be owned by RCDSO members. Any change needs advice from your lawyer and accountant, well before a sale.
Does alternative minimum tax apply when I sell my dental practice?
It can. Under federal changes that received royal assent on 20 June 2024, the AMT rate is 20.5%, and 30% of gains eligible for the lifetime capital gains exemption count in the AMT calculation, according to PwC. A dentist who uses the exemption on a large sale may owe some minimum tax that year. Ask your accountant to run the numbers.
Can I spread the capital gain if I finance part of the sale?
Often yes. CRA’s capital gains guide says that when part of the price is paid later, most sellers can claim a reserve and include the gain over up to five years. For qualified small business corporation shares transferred to your child, it can be up to ten years. A reserve interacts with the exemption and AMT, so check with your accountant first.
Sources
- CRA: Line 25400, Capital gains deduction
- Prime Minister of Canada: Prime Minister Mark Carney cancels proposed capital gains tax increase (21 March 2025)
- CRA: Guide T4037, Capital Gains 2025
- BDO Canada: Getting your dental practice ready to sell
- PwC Canada: Changes to alternative minimum tax enacted (2024)
- O. Reg. 665/05: Health Profession Corporations, Business Corporations Act (Ontario e-Laws)
- Oral Health Group: Shares versus assets, transacting an incorporated dental practice, part one (2005)
- BMO Nesbitt Burns (Surcon Mahoney Wealth Management): The complete guide to buying a dental practice in Canada (2026)
Related reading
- How to Sell a Dental Practice in Ontario: A Step-by-Step Guide (2027)
- How Much Is a Dental Practice Worth in Ontario? (2027)
- Dental Practice for Sale in Toronto and the GTA: How to Find One (Including Off-Market)
- Start a Dental Practice or Buy One? Ontario Costs Compared (2027)
About the author — Jatin Dua, Toronto and GTA real estate broker
I am Jatin Dua, Broker of Record and co-founder of RE/MAX Quantum Realty Inc., Brokerage, Unit 101, 799 The Queensway, Toronto. I work with buyers and sellers across Toronto and the GTA and have helped more than 100 families sell. Four-plus years of active GTA transactions and over $100 million in sales volume.
Reach me at [email protected] or 833-330-1925, or book a call.