Calculate tax on capital gains using the 50% inclusion rate (under $250K/year)
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Claim $100 Bonus →Canada taxes only 50% of capital gains for individuals on gains under $250,000 annually. If you sell an investment for a $100,000 gain, only $50,000 is added to your taxable income. This is called the "inclusion rate." The other $50,000 is completely tax-free regardless of your income level.
The 2024 federal budget proposed increasing the inclusion rate to 2/3 (66.67%) for capital gains exceeding $250,000 annually for individuals. As of 2026, this proposal was subject to political uncertainty — verify the current rules with CRA or a tax professional if you have large gains. This calculator uses the 50% inclusion rate for all amounts.
Gains on your principal residence are completely exempt from capital gains tax in Canada. This is one of the most valuable tax shelters available — a home that doubled in value from $500K to $1M generates zero capital gains tax if it was your principal residence for all years owned. Only one property can be designated per family unit per year.
Your taxable gain = sale price minus your adjusted cost base (ACB). ACB includes the original purchase price plus acquisition costs (commissions, legal fees), capital improvements (for real estate), and reinvested distributions (for mutual funds and ETFs). Accurately tracking ACB is critical — most investors underestimate their ACB, leading to overpayment of tax.
Capital losses can offset capital gains in the current year, three prior years, or carried forward indefinitely. Net capital losses must be used against capital gains only — they cannot offset employment or other income. Superficial loss rules prevent claiming losses on investments repurchased within 30 days before or after the sale.
Capital gains generated inside a TFSA or RRSP are completely sheltered from tax. Growth in a TFSA is never taxed, even on withdrawal. RRSP gains are deferred until withdrawal when they're taxed as regular income — but all growth is still sheltered during the accumulation phase.