Updated Checked by the Tax-Services.ca editorial team How we check
If you live in Canada and sell US stocks, you owe capital gains tax to Canada, not to the USA, in most cases. Canada taxes your worldwide gains, and the IRS generally leaves a nonresident’s stock gains alone unless you spent 183 days or more in the US that year. Half of the gain goes on your return as income.
Does a Canadian pay capital gains tax USA style on stocks?
Usually not. The IRS says a flat 30% tax (or a lower treaty rate) applies to US-source capital gains for nonresident individuals present in the US for 183 days or more in the year. Below that line, a nonresident’s gain on shares is normally not US-source, so the US has nothing to tax. The exact wording on the IRS page covers students, scholars and government employees, so treat it as the general rule and not as advice for your own case.
Canada is the other half. Once you’re a resident, the CRA wants every gain from anywhere in the world on your return. A US brokerage account changes nothing about that.
Picture Priya in Toronto, who winters in Arizona for ten weeks and sells some American index shares in April. Ten weeks is well under 183 days, so the US side stays quiet. Her Canadian return is where the sale shows up.
What does the tax cost in Canadian dollars?
Only half of the gain is added to your income, and the rest is taxed at your usual rates. The capital gains tax calculator does the adding for you. Here is one example from the engine: a Manitoba resident with $70,000 of other income sells US shares for a $40,000 gain, already converted to Canadian dollars. The extra tax is $6,650, or 16.6% of the gain, so $33,350 stays with you.
Now change the income. In Ontario, with $90,000 of other income and a $95,000 gain, the extra tax is $17,450.83. That’s 18.4% of the gain. The bigger your other income, the higher the slice that the gain lands on.
| Example (calculator) | Gain | Extra tax | Share of gain |
|---|---|---|---|
| Manitoba, $70,000 other income | $40,000 | $6,650.00 | 16.6% |
| Ontario, $90,000 other income | $95,000 | $17,450.83 | 18.4% |
| Ontario, $60,000 other income | $50,000 | $7,562.50 | 15.1% |
Notice that none of those shares reaches 25%. That’s the half-gain rule at work: only $20,000 of the first gain, $47,500 of the second and $25,000 of the third was added to income.
How do you convert US dollars for the CRA?
You can’t just use the number on your US statement. The CRA folio on reporting currency says amounts in another currency go into Canadian dollars at the spot rate for the day they arose, and the default is the Bank of Canada rate for that day. That applies twice: once for the day you bought and once for the day you sold. The dollar can move a lot between the two, so a gain in US dollars may be bigger or smaller, or even a loss, in Canadian dollars.
Here’s a made-up example with round numbers, not real exchange rates. You buy 100 shares at US$50 when one US dollar costs C$1.30, so your cost is C$6,500. You sell at US$60 when the rate is C$1.40, so the proceeds are C$8,400. The gain is C$1,900, even though the statement shows only US$1,000. Flip the rates the other way and the same trade could show a smaller gain.
Average rates are allowed for some income items, but the CRA says they won’t do if rates swing a lot. For a sale, use the daily rates.
Can you claim credit for US tax you did pay?
Yes, when US tax was really charged. A Canadian resident who paid foreign income tax can claim the federal foreign tax credit on line 40500 with Form T2209. The credit is the smaller of the foreign tax paid and the Canadian tax on that country’s income, so you can’t get back more than Canada would have charged. A tax treaty can change who is eligible.
The credit only helps if you paid tax. If the US charged nothing on your stock gain, there’s nothing to claim, and Canada’s tax stands on its own.
Where people slip up
Forgetting the second form is the classic one. If the cost of your foreign property goes over $100,000 at any point in the year, you file Form T1135 with your return. The test uses cost, not market value, and the CRA says shares of non-resident corporations count even when a broker holds them. Foreign property inside an RRSP or a TFSA is left out of T1135.
Another slip is reporting the US-dollar figure straight off the brokerage slip. Keep a simple sheet with the date, the amount in US dollars and the Bank of Canada rate for each buy and sell. At tax time it saves a lot of digging.
US real estate is a different topic, and this page doesn’t cover it. We didn’t confirm the US rules on selling a US home as a Canadian, so read the IRS pages for nonresident aliens or ask a cross-border preparer before you sign a sale.
Our calculator also has limits. It works in Canadian dollars, it counts half the gain, and it doesn’t model the foreign tax credit, so a US tax bill isn’t netted off. If you sell in a year with other big income, run the numbers with the marginal tax rate calculator too. To see the whole return, use the income tax calculator. Investors who hold US shares in a registered plan can compare with the TFSA calculator.
How we checked the figures
The 30% rule and the 183-day test come from the IRS, and the foreign tax credit, T1135 and currency rules come from the CRA. The half-gain rate for 2026 is our engine’s setting: the CRA page we read on the cancelled increase doesn’t state the 50% figure in one line, so check it on the CRA site before you file. The tax examples come from our calculator using 2026 rates, and the currency example above is invented to show the arithmetic. This website has no connection with the CRA, the IRS or any government body.
Frequently asked questions
Do Canadians pay capital gains tax in the US on US stocks?
Generally not, unless they spent 183 days or more in the US in the year. The IRS then applies a flat 30% (or a lower treaty rate) to US-source gains. Canada taxes the gain either way.
Which exchange rate do I use for a US sale?
The CRA default is the Bank of Canada rate on the day the amount arose. Use it for the purchase day and again for the sale day.
Do I get a credit if the US did tax me?
You can claim the federal foreign tax credit on line 40500 with Form T2209. It is the lesser of the foreign tax paid and the Canadian tax on that income.
When do I file Form T1135?
When the cost of your specified foreign property goes over $100,000 at any time in the year. Property held in an RRSP or TFSA is excluded.
What about selling a US house?
We could not confirm the US rules for that, so this page doesn't cover it. Check the IRS pages for nonresident aliens before you sell.