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A corporation adds half of a capital gain to its income, so the capital gain rate for corporations starts at 50%. Sell shares for a $100,000 profit and $50,000 is taxable while the other $50,000 isn’t taxed inside the company. What the company then pays on that taxable half is a separate question, and that turns on what kind of corporation you run.
What share of the gain is taxable?
One half. The CRA calls this the inclusion rate, and its own guide gives 1/2 for the most recent year it covers. The government talked about raising it to two thirds, then cancelled the idea in March 2025, so half is what applies. The CRA’s own page for corporations puts it plainly:
It was later announced that this proposed increase was cancelled.
What’s new for corporations, canada.ca
We couldn’t find a canada.ca page that repeats the figure for 2026 in so many words, so look at the current CRA guide before a large sale.
Notice there’s no threshold. A $10,000 gain and a $2 million gain are both cut in half.
| Capital gain | Taxable half | Untaxed half |
|---|---|---|
| $10,000 | $5,000 | $5,000 |
| $50,000 | $25,000 | $25,000 |
| $100,000 | $50,000 | $50,000 |
| $250,000 | $125,000 | $125,000 |
Which tax rate hits the taxable half?
The small business rate doesn’t apply. That low federal 9% rate is for active business income, up to a $500,000 limit that associated companies share. A gain on shares or a rental building is investment income, and private corporations pay more on it than on shop profits.
The CRA describes part of that tax as refundable. It puts the refundable portion at 30 2/3% of the corporation’s aggregate investment income, and the company gets it back as it pays taxable dividends to its owners. What we couldn’t do is find one official page that gives the full combined rate for each province, so we won’t quote a single number here. If you want a sense of scale, the ordinary corporate rates are 15% federal and 11.5% in Ontario, but investment income sits above those.
The corporate tax calculator handles business profit. It ignores investment income rules, so don’t feed it a gain and trust the answer. In Ontario it also uses a blended small business rate for calendar 2026 that we derived ourselves (the rate was cut on 1 July 2026), so treat that figure as an estimate.
What does the untaxed half do?
It doesn’t vanish. Under CRA rules the non-taxable part of a capital gain goes into the corporation’s capital dividend account. The company can elect to pay that amount to shareholders as a capital dividend, and they receive it tax-free. It’s the reason a corporation and an owner can end up close to even on a gain, so ask your accountant before you pay yourself anything.
A quick picture. Maya’s company sells shares at a $100,000 gain and has no other capital gains or losses that year. $50,000 goes into taxable income and $50,000 into the capital dividend account. If the company also sold a different holding at a $30,000 loss, the net gain is $70,000 and the split is $35,000 and $35,000. The loss quietly shrinks both halves.
A $100,000 gain, two ways
Say a person in Ontario with $90,000 of other income sells shares held personally for a $100,000 gain. The capital gains tax calculator shows $18,536 of extra tax, or 18.5% of the gain. Some of that comes from tax steps and the Ontario surtax, which is why it’s a bit higher than you’d guess from the tax brackets alone.
The same gain inside a private company starts with $50,000 taxable, then meets the investment income rate above. Your other income, your province and how soon you need the cash decide which route leaves more. Ask for the total tax at both levels, company and owner. The dividend tax calculator covers the personal side when profits are paid out as ordinary dividends.
Do you report the gain if the money stays in the company?
Yes. The gain belongs to the year of the sale, whether the cash is sitting in the company’s bank account or already reinvested. Leaving it there doesn’t postpone anything. What you can control is when the company pays dividends to you, and that’s a separate decision with its own tax.
Mistakes that cost money
Using 9% or 11.7% on a gain is the big one. It understates the bill by a wide margin.
Another is electing a capital dividend larger than the account holds. The CRA says 60% of the excess can be hit with Part III tax, so check the balance first. And capital losses only cancel gains. A company that lost $40,000 on one holding can’t use it against shop profit.
Finally, the exemption for small business shares that appears on personal tax pages is aimed at individuals. We didn’t find anything that gives a company the same break, so don’t count on it.
For the step by step of reporting a sale, read how capital gains tax works for a corporation, and for what happens to the money afterwards see capital gain corporation tax after the sale. Your personal picture is in the income tax calculator.
Where this information comes from
The one half inclusion rate, the capital dividend account and the 60% Part III rule come from CRA guidance, including its capital gains guide and capital dividend account page. The corporate rates come from the CRA corporation tax rates page for 2026, and the cancelled increase from a March 2025 federal announcement. The personal example comes from our own calculator, which uses 2026 Ontario and federal tax data. This site is independent of the CRA and every government.
Frequently asked questions
What is the capital gain rate for corporations in Canada?
A corporation includes one half of a capital gain in income. The tax rate on that half depends on the type of corporation and the province.
Does the small business rate apply to capital gains?
No. The small business rate is for active business income. Gains on shares or property are investment income, which private companies tax at a higher rate.
What happens to the half that isn't taxed?
It goes into the capital dividend account. The company can elect to pay it to shareholders as a capital dividend, tax-free to them.
Can a corporation use capital losses against business profit?
No. Capital losses only reduce capital gains, and unused net losses can be carried back three years or forward with no end date.
Did the capital gains inclusion rate go up?
The proposed increase to two thirds was cancelled in March 2025. We couldn't find a 2026 page that restates one half, so check the current CRA guide.
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