Updated Checked by the Tax-Services.ca editorial team How we check
There’s no separate Canadian corporate capital gains tax rate. A corporation adds half of a capital gain to its income, and that taxable half is taxed at the corporation’s rate for that kind of income. For a private corporation, gains count as investment income, and part of the tax on it can be refunded later.
How much of a corporate capital gain is taxed?
Half, and that’s the easy part. The Canada Revenue Agency’s capital gains guide gives the inclusion rate as one half, and our 2026 data uses the same figure, though the site owner still has it marked for review. The other half isn’t taxed.
That untaxed half isn’t wasted either. It goes into the capital dividend account, which a corporation can later use to pay dividends to its shareholders under special rules. Get the paperwork right on that one, so have the corporation’s accountant handle it.
What rate applies to the taxable half?
This is where you’ll likely get stuck, and you’re not alone. The 9% federal rate and the small provincial rates you see quoted apply to active business income. They don’t apply to a gain on shares or a rental building held as an investment.
| Item | What the CRA says |
|---|---|
| Part of a capital gain taxed | One half (inclusion rate) |
| Federal general rate, active income | 15% after the general reduction |
| Federal rate with the small business deduction | 9% |
| Ontario general rate | 11.5% |
| Ontario lower rate | 3.2%, with a cut announced |
| Refundable part of tax on investment income | 30 2/3% of aggregate investment income, with limits |
The table doesn’t include one combined figure for investment income, because we couldn’t find one printed in the CRA’s rate summary. Your accountant can work it out from your province and the T2 schedules. Don’t take a number from a blog post, including ours.
What does a $100,000 corporate gain look like?
Picture a small holding company in Hamilton. It sells shares for $200,000 that cost $100,000. The gain is $100,000, and the steps go like this.
| Step | Amount |
|---|---|
| Capital gain | $100,000.00 |
| Taxable half, added to income | $50,000.00 |
| Untaxed half, to the capital dividend account | $50,000.00 |
| Refundable ceiling, 30 2/3% of $50,000 | $15,333.33 |
The refundable ceiling is the most that can flow back to the corporation through the dividend refund system. It only comes back when the corporation pays taxable dividends, and the refund has its own limits. It isn’t a tax saving on its own. Think of it as a ballpark for the part of the bill that’s parked, not gone.
Is it cheaper to hold the shares yourself?
Sometimes. Your other income decides it. The same $100,000 gain in your own hands, on top of $100,000 of other income in Ontario, costs $19,886.24 in extra tax. That’s 19.9% of the gain, and you can check it in the capital gains tax calculator.
Now take the money out of a corporation. Pay $50,000 of other (non-eligible) dividends to a shareholder with $100,000 of other income in Ontario, and the dividend tax calculator shows $15,370.36 of personal tax. So a corporate gain may face tax twice, once inside the company and once when it comes out. The refund and the capital dividend rules exist to soften that.
Which route wins? We can’t tell you without your own numbers, and the two results above aren’t a like-for-like comparison. One is a gain taxed to a person. The other is a dividend paid out of a company, and the company’s own tax isn’t in that second figure.
What does our corporate calculator cover?
The corporate tax calculator handles active business income. For a Canadian-controlled private corporation with $300,000 of taxable income in Ontario for calendar 2026, it shows $35,088 of tax, an average of 11.7%. Ontario cut its small business rate on July 1, 2026, so that figure is a prorated blend. It does not model capital gains, passive income or the small business limit reduction.
What should you gather before talking to an accountant?
A corporation’s gain is only as clear as its records. Before the year-end meeting, pull together a few things so the conversation is short and the answer is real.
- What the corporation paid for the asset, plus any costs of buying it.
- What it sold for, less the costs of selling.
- The date of each, since the gain belongs to the year of the sale.
- Any capital losses from earlier years that are still unused.
- Whether the corporation is a Canadian-controlled private corporation, and its other investment income for the year.
What trips people up?
- Assuming the small business rate covers a gain. It doesn’t.
- Forgetting that passive income above $50,000 can reduce the small business limit. The CRA describes the reduction from $50,000 to $150,000 of investment income, so a large gain has knock-on effects.
- Losses. Allowable capital losses offset gains, but only against gains, and we haven’t modelled how they carry back or forward.
- Business property. Selling equipment can follow other rules than a share sale, and we haven’t covered them.
- Treating the refundable amount as money in the bank. It only comes back later, and only when dividends go out.
Sources, and how we checked them
Rates and rules come from the Canada Revenue Agency: its corporation tax rates page, the Ontario corporate tax page and the T2 corporation guide for 2026. Personal tax figures use the 2026 data behind our calculators. We have no connection to any government body, and none of this replaces a corporate tax return prepared for you.
Frequently asked questions
What is the capital gains inclusion rate for a corporation?
One half. Half of the gain is added to income and the other half is not taxed. Our 2026 data uses one half and marks it for review.
Does the small business rate apply to capital gains?
No. The small business deduction applies to active business income, not to investment gains.
What is the refundable part of tax on investment income?
The CRA gives the refundable portion of Part I tax for a Canadian-controlled private corporation as 30 2/3% of aggregate investment income, subject to limits.
What happens to the untaxed half of a corporate gain?
It goes into the capital dividend account, which can be used to pay dividends under special rules.
Is there a single combined corporate rate on capital gains?
We couldn't confirm one from the CRA's rate summary. It depends on the province and the type of corporation, so ask your accountant.
- RRSP, TFSA, FHSA and retirement income in Canada
How the RRSP, TFSA and FHSA differ, the 2026 limits, what happens when you withdraw, and where CPP and OAS fit into your retirement income