The measure will increase the lifetime capital gains tax exemption to C$750,000 from C$500,000 and means that Canadian business-owners who sell shares of a qualifying corporation for a profit can receive the first C$750,000 of their gain tax-free.

Farmers will also be entitled to the lifetime $750,000 capital gains exemption on qualified farm property such as farmland, buildings and shares of farm companies.

“There’s nothing small about the role small business plays in the creation of jobs and growth in Canada’s economy,” Mr Martin stated.

“Raising the lifetime capital gains exemption to C$750,000 from C$500,000 will allow small-business people and farmers to keep more of the profit from the sale and transfer of their businesses to a new generation," he added.

Under Liberal plans, small and medium-sized businesses with income of more than C$300,000 will benefit from the two-percentage-point reduction in the general corporate income tax rate to 19 per cent from 21 per cent which was proposed in Budget 2005 and confirmed in the recent Economic and Fiscal Update.

Businesses undertaking risky ventures will also benefit from the doubling of the carry-forward periods for business losses and investment tax credits to 20 years.