Updated Checked by the Tax-Services.ca editorial team How we check
Capital gains tax on corporations works in four moves: work out the gain, net it against losses, count half as income, then tax that half at the company’s rate. If a corporation buys shares for $150,000 and sells them for $250,000 with $5,000 of costs, the gain is $95,000 and $47,500 of it lands in taxable income.
How do you work out the gain?
Take what the company got, subtract what it paid (the adjusted cost base) and subtract the costs of selling. That’s the same recipe an individual uses. Our capital gains tax calculator is built for people, but its gain line does the same arithmetic, and you can borrow it for that step.
Keep the purchase paperwork. The cost base is the number you’ll be asked to prove. Brokerage statements, closing documents and the dates on them all belong in one folder that someone besides you can find.
What if some sales lose money?
Losses matter more than most owners expect. A capital loss can only wipe out capital gains, so it does nothing against the shop’s profit. Say the same company also sold a holding at a $25,000 loss in the same year.
| Step | Amount |
|---|---|
| Sale price | $250,000 |
| Purchase price | $150,000 |
| Selling costs | $5,000 |
| Gain on this sale | $95,000 |
| Loss on the other sale | $25,000 |
| Net capital gain | $70,000 |
| Taxable half, added to income | $35,000 |
If the losses had been bigger than the gains, the leftover is a net capital loss. The CRA lets a corporation carry it back three years or forward with no end date, and use it only against taxable capital gains. So check the prior years before you write the loss off as wasted.
Picture a small landscaping company in Saskatoon that sold one investment at a gain and another at a loss in the same December. Netting them inside the one tax year is automatic on paper, but only if both sales were reported. A forgotten loss is a forgotten saving, and it’s one of the easier ways to leave a few thousand bucks on the table at tax time. If the books were tidy, it takes minutes to catch.
Which rate applies to the taxable half?
This is where the quick answers online go wrong. The half you add to income is not active business income, so the small business rate doesn’t reach it. Private companies pay a higher tax on investment income, with part of it refundable when the company pays taxable dividends. We couldn’t confirm one combined figure per province from an official page, so we haven’t invented one.
What we can confirm is the ordinary business rates, which you can compare in the corporate tax calculator. On $100,000 of business profit in Ontario, a general corporation pays $26,500 and a small business company pays $11,696, though that second figure rests on a 2026 blend of the Ontario rate that we derived, because the province cut it partway through the year. Use those numbers for shop income, and don’t reuse them for gains.
When is the tax due?
Corporations pay in instalments during the year and settle the balance after year end. The CRA says the balance is generally due two months after the year ends, or three months for many Canadian-controlled private corporations that meet its conditions. Instalments are expected once the total tax is above $3,000. The CRA’s balance-due day page lists those conditions.
A big sale late in the year can leave you short. If you know a sale is coming, ask the accountant what the instalments should look like before the year closes, and for your own share of the profit see the tax instalments calculator.
For a company with a December 31 year end, two months means the end of the following February and three months means the end of March. That’s a short runway after a December sale, so it pays to set the cash aside the day the money lands.
Where people slip up
The most common slip is treating the company’s gain as the owner’s gain. They’re two taxpayers. The lifetime capital gains exemption you may have read about is set up for individuals, and we didn’t find a version for a company, so don’t budget for it.
Another is forgetting to report a sale that had a loss. Losses aren’t automatic, and you can’t use one that was never filed.
How the money leaves the company afterwards is a separate story, covered in capital gain corporation tax. For the headline percentages, see the capital gain rate for corporations.
How we checked the figures
The one half inclusion rate, the treatment of losses and the payment dates come from the CRA‘s capital gains guide, its T2 corporation guidance and its corporation payment pages. The business rates come from the CRA corporation tax rates page for 2026. The examples come from our own corporate tax calculator and simple arithmetic. This site isn’t part of any government.
Frequently asked questions
How is a corporation's capital gain calculated?
Sale price minus the adjusted cost base minus selling costs. Half of the net gain, after losses, is added to taxable income.
Can a corporation deduct capital losses from business income?
No. Capital losses only reduce capital gains. An unused net loss can be carried back three years or forward with no end date.
When does a corporation pay tax on a capital gain?
Tax is paid with instalments and the balance. The CRA says the balance is generally due two months after year end, or three months for many CCPCs.
Does a corporation get the lifetime capital gains exemption?
We didn't find that it does. The exemption is set up for individuals, so don't plan around it without checking.
Does the small business rate apply to a capital gain?
No. It applies to active business income. Investment income in a private corporation is taxed at a higher rate, part of it refundable.
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