Summary: On a large single-stock position, most of the tax is already owed, and waiting only decides what the shares are worth when it is paid. Donating shares, using losses and staging sales can help, but the more important decision is how quickly to reduce a concentration that ties your wealth to one company.
The short answer
For a large position, most of the tax on the gain is a cost you already carry. In BC, a capital gain is taxed at up to 26.75% in 2026, and because the lower tax brackets apply only to the first few hundred thousand dollars of income in any year, spreading the sale of a multi-million-dollar position over several years changes the total tax far less than most people expect. Selling later does not avoid the tax. It postpones it, while the whole position stays exposed to one company.
The tools that genuinely reduce the tax are narrower: donating shares in kind to charity, offsetting gains with capital losses, recognizing gains in years when other income is low, and, for shares never sold, the deemed disposition at death, which defers the tax rather than removing it. The more useful question is therefore how quickly to reduce the concentration, using those tools where they fit, rather than how to make the tax disappear.
Waiting does not avoid the tax. It only decides what the shares are worth when the tax is finally paid.
Why the tax bill is the wrong place to start
Large single-stock positions rarely arrive by accident. They are shares of a former employer, stock received from a buyer as part of the price of a business, or an early investment that became the largest thing you own. The cost base is often close to zero, the company is familiar, and selling feels like writing a cheque to the government for something you have not yet spent.
That feeling is understandable, but it rests on a misreading. Your after-tax wealth today is the same whether you sell or not, because the tax on the gain is owed either way unless the shares are given to charity. What selling changes is what happens next: the proceeds can be spread across many companies, or the full value can stay tied to one.
An illustration
Consider a hypothetical position worth $10 million with a cost base of $1 million, held personally by a BC resident taxed at the top rate.
| Scenario | Value of the position | Tax on the gain at 26.75% | Value after tax |
|---|---|---|---|
| Sold today | $10,000,000 | $2,407,500 | $7,592,500 |
| Held, and the stock later falls 30% | $7,000,000 | $1,605,000 | $5,395,000 |
| Held, and the stock later rises 30% | $13,000,000 | $3,210,000 | $9,790,000 |
Illustrative only. These are hypothetical scenarios, not forecasts. Uses BC's 2026 top combined rate on capital gains of 26.75% and ignores the timing value of deferring tax, investment returns on a diversified alternative, and the effect of other income. Results depend on personal circumstances.
Holding is not a way of saving the tax. It is a decision to keep making the same concentrated bet, with the tax still waiting at the end of it.
How much tax will I pay on selling a large stock position in BC?
Half of a capital gain is included in income, and the inclusion rate remains one half in 2026 after the proposed increase to two thirds was cancelled in 2025. At BC's 2026 top combined rate of 53.50% on ordinary income, the top rate on capital gains is 26.75%. The top federal bracket begins at $258,482 of taxable income and BC's top bracket at $265,545, so once the taxable half of a year's gains passes that level, every additional dollar of gain is taxed at the top rate.
That is why staging a sale across tax years helps less at this scale than it does for smaller positions. Spreading a $9 million gain over three years moves a few hundred thousand dollars of income per year through the lower brackets, which is worth something but is small relative to the total, and it keeps most of the position exposed for longer. Staging is still often worthwhile, but more for managing risk, regret and market timing than for the tax.
What actually reduces the tax on a concentrated position?
Donating shares in kind. When publicly listed shares are donated directly to a registered charity, including a donor-advised fund or a private foundation, the capital gain on those shares is not taxable for regular tax purposes, and the donation earns a tax credit on their full value. Donations can generally be claimed up to 75% of net income in a year, rising to 100% in the year of death and the year before, and unused amounts can be carried forward five years. For a founder who intends to give significantly in any case, giving the lowest-cost shares rather than cash is one of the few ways to remove tax on a gain rather than defer it. The alternative minimum tax now includes 30% of gains on donated listed securities and allows only 80% of the donation credit, so a large gift should be modelled before it is made.
Donating through a holding company. Where the shares are held in a private corporation and the corporation makes the donation, the full gain on the donated shares is added to its capital dividend account and can be paid out to shareholders tax-free, which makes corporate donations worth comparing with personal ones.
Using capital losses. Capital losses realized elsewhere in the portfolio in the same year, and net capital losses carried forward from earlier years, offset gains on the position. Losses are denied under the superficial loss rule if you, your spouse or a corporation you control acquire the same or identical property within 30 days before or after the sale, in which case the loss is added to the cost of the replacement shares rather than lost.
Timing gains into low-income years. For moderate amounts, recognizing gains in years when other income is low, such as the early years of retirement before RRIF minimums and government pensions begin, can use the lower brackets more fully.
Holding until death. Shares still owned at death are deemed sold at fair market value on the final return, unless they pass to a spouse or a spousal trust, in which case the tax is generally deferred until the second death. This defers the tax rather than removing it, and it leaves the concentration in place for the rest of your life, which for most people is a high price for deferral.
Can I hedge the position instead of selling it?
Sometimes, but the room is narrower than it once was. Since 2013, Canada's synthetic disposition rules treat an arrangement that eliminates your risk of loss and opportunity for gain on a property for more than a year, such as a forward sale, total return swap or certain collars, as a sale of that property for tax purposes. Strategies that protect only against a decline, such as buying put options, can fall outside those rules but carry their own costs and limits. Hedging large positions is specialized work, and any strategy should be reviewed by your tax advisor before it is put in place.
How do I reduce a concentrated position in stages?
A staged plan usually works better than a single decision, provided it is written down before the first sale so that it is not renegotiated one market headline at a time.
- Set the target. Decide what share of your total wealth the position should represent when the plan is complete, and over what period.
- Set aside the giving. If charitable giving is part of your plans, identify the lowest-cost shares to donate in kind and the years in which the donation credits can be used.
- Set the sale schedule. Sell in fixed amounts on fixed dates, or on a combination of time and price triggers, across tax years where it helps.
- Match losses and gains. Coordinate sales with any capital losses available elsewhere, within the superficial loss rule.
- Reinvest with a purpose. Move the proceeds into a diversified portfolio built around what the money needs to do, as set out in an investment policy statement.
If you are an insider of the company. Directors, officers and significant shareholders face trading restrictions, blackout periods and insider reporting. An automatic securities disposition plan, which Canadian securities regulators addressed in CSA Staff Notice 55-317, can allow sales to proceed on a predetermined schedule, but it must be put in place when you have no material undisclosed information, typically with a waiting period before the first sale. Plans of this kind should be arranged with the company and your legal advisors.
If you received the shares as part of a business sale. Buyer shares often come with a lockup or escrow period, during which the position cannot be reduced at all. The plan for those shares belongs in the investment policy statement from the start, so that the first sales after the lockup follow a schedule rather than a reaction.
What mistakes make a concentrated position more expensive?
Waiting for a price. Holding out for a target that the stock once reached is the most common reason positions stay concentrated far longer than intended.
Giving cash instead of shares. A donor who sells shares and then donates the proceeds pays tax on the gain that an in-kind gift would have avoided.
Tripping the superficial loss rule. Selling a losing position to offset a gain and buying it back within 30 days, including through a spouse or your own corporation, can deny the loss.
Hedging without tax advice. A collar or forward contract that eliminates both upside and downside can be treated as a sale, triggering the tax it was meant to defer.
Doubling the exposure. Holding shares of a former employer or buyer while also depending on that company for income, a pension or an earnout concentrates more than one part of your financial life on the same outcome.
The tax on a concentrated position is visible and certain. The risk is invisible until it is not, which is why it is so often underweighted.
What changes the picture?
The shares are held in a holding company. A gain realized inside a corporation is taxed at corporate investment rates, with the non-taxable half added to the capital dividend account, so the decision connects to how money will eventually come out of the company. Our article on whether to leave money in a holding company or take it out covers the mechanics.
The shares are in a private company. A sale of shares in a qualifying private company can be sheltered by the lifetime capital gains exemption, which does not apply to publicly listed shares. Our article on how the exemption works when you sell a company in BC explains the tests.
You are a US citizen or US resident. The gain is also taxable in the US, with different rates and rules, and Canadian strategies such as donations to Canadian charities may not produce the same US result, so cross-border advice is needed before selling or giving.
You plan to leave Canada. Ceasing to be resident triggers a deemed disposition of most property, including a concentrated position, so the timing of a move and a sale should be planned together.
You intend to leave a substantial legacy. Shares donated at death, or left to a spouse, are treated differently from shares sold during your lifetime, and permanent life insurance can fund the tax on a position that is intended to pass to the next generation.
Where Westmount starts
Westmount Wealth Management is a Canadian portfolio manager with offices in Vancouver, Qualicum Beach and Toronto. It is registered in BC, Alberta, and Ontario and provides discretionary portfolio management to founders during and after a business sale, as well as to incorporated and asset-rich retirees.
For founders and executives holding a concentrated position, the work starts with the whole picture: what the position represents within total wealth, what the money needs to do, whether giving is part of the plan and what the tax looks like across the entities and years available. From there, a written plan sets the target and the schedule, coordinated with your accountant and lawyer, and the proceeds move into a diversified portfolio as the position comes down. Where the shares are part of a planned sale, the conversation is best started before the deal is signed, while the mix of cash and shares can still be shaped. The first conversation is a discovery meeting to understand the position and what you want it to become.
Frequently asked questions
How much tax will I pay if I sell my shares in BC?
Half of a capital gain is taxable, so at BC's 2026 top combined rate of 53.50% on ordinary income, the top rate on a capital gain is 26.75%. On a large gain, most of the taxable amount is taxed at the top rate because the lower brackets apply only to the first few hundred thousand dollars of income each year.
Is it better to sell a large position all at once or over several years?
For a multi-million-dollar gain, spreading sales across years usually reduces the tax by a modest amount relative to the total, because most of the gain is taxed at the top rate in any year. Staging is still useful for managing risk and timing, and the right pace depends on the size of the position, your other income and how much concentration risk you are prepared to carry while you sell.
How does donating shares reduce tax?
When publicly listed shares are donated in kind to a registered charity, the capital gain on those shares is not taxable for regular tax purposes and the donation earns a tax credit on their full value. Donations can generally be claimed up to 75% of net income, with a five-year carryforward, though a large gift can trigger alternative minimum tax and should be modelled first.
Can I avoid capital gains tax by holding my shares until I die?
No. Shares are deemed sold at fair market value at death and the gain is taxed on the final return, unless they pass to a spouse or spousal trust, which generally defers the tax until the second death. Holding until death defers the tax but keeps the full position exposed for the rest of your life.
Can I use a collar or forward contract to avoid selling?
An arrangement that eliminates both your risk of loss and your opportunity for gain for more than a year is generally treated as a sale under Canada's synthetic disposition rules. Strategies that protect only against a decline may fall outside those rules, but they should be reviewed with a tax advisor first.
Does it matter whether the shares are in my holding company?
Yes. A gain inside a corporation is taxed at corporate investment rates, and the non-taxable half is added to the capital dividend account, which can be paid out tax-free. The overall tax is similar to selling personally, but the timing of when the money reaches you, and how, is different.
References
- KPMG, Combined top marginal tax rates for individuals, 2026 (BC 2026 top rates: 53.50% ordinary income, 26.75% capital gains).
- Government of British Columbia, Personal income tax rates (2026 BC top bracket above $265,545).
- Canada Revenue Agency, Indexation adjustment for personal income tax and benefit amounts (2026 federal top bracket from $258,482).
- Prime Minister of Canada, Prime Minister Mark Carney cancels proposed capital gains tax increase, March 21, 2025.
- KPMG, Make your 2025 charitable donations tax-effective (no taxable gain on donated listed securities; 75% of net income limit; five-year carryforward; AMT treatment; capital dividend account on corporate donations).
- TaxTips.ca, Superficial losses and other disallowed losses (30-day rule; affiliated persons; denied loss added to cost base).
- Thor Law, Synthetic dispositions (Budget 2013) (arrangements eliminating risk of loss and opportunity for gain for more than one year).
- Torys LLP, Recommended practices for automatic securities disposition plans (CSA Staff Notice 55-317).
This information has been prepared by Westmount Wealth Management Inc. Westmount Wealth Management Inc. is registered as a Portfolio Manager in British Columbia, Alberta, and Ontario. Westmount Wealth Planning Inc. is a subsidiary of Westmount Wealth Management Inc.
This material is distributed for informational purposes only and is not intended to provide personalized legal, accounting, tax, or specific investment advice. Please speak to a Westmount Wealth Advisor regarding your unique situation.
