Updated Checked by the Tax-Services.ca editorial team How we check
Federal capital gains tax in Canada applies to only part of your gain. The working figure is a 50% inclusion rate, so half of a gain is added to your income and taxed at your normal rates. There isn’t a separate flat rate. What you owe depends on what else you earned that year, so the same gain can cost two neighbours quite different amounts.
How is a capital gain worked out?
Take what you sold the asset for. Subtract what you paid for it (the adjusted cost base) and the costs of selling it, such as commissions. What’s left is the gain. If it’s negative, you have a capital loss.
Say Jordan in Regina sells shares for $15,000. They cost $10,000, and the broker took $100 on the sale. The gain is $15,000 minus $10,000 minus $100, or $4,900. At a 50% inclusion rate, $2,450 of it is the taxable capital gain, and that $2,450 is what lands on the return.
That number goes on your return, and the CRA’s line 12700 page says you report taxable capital gains there when they exceed your allowable capital losses. The details of the calculation sit on Schedule 3.
Is the inclusion rate still 50%?
It was headed for a rise. A proposal to raise the rate to two-thirds was cancelled in the Prime Minister’s release of 21 March 2025, which says the government will cancel the proposed hike and keep the higher lifetime exemption limit of $1,250,000. We couldn’t find a CRA rate page that states 50% for 2026 in one line. So treat 50% as the working figure and check the CRA before you file for a big sale. It’s the rate our calculator uses.
| Item | Figure |
|---|---|
| Share of a gain that is taxable | 50% (working figure; check the CRA capital gains guide for your year) |
| Proposed rise to two-thirds | Cancelled, 21 March 2025 |
| Lifetime exemption, qualified small business shares and farm or fishing property | $1,250,000 as of 25 June 2024; the Department of Finance lists $1,275,000 for 2026 |
| Your main home | Usually exempt when designated; report the sale on your return |
What does a gain cost in Ontario?
Here’s a real comparison. You earn $90,000 in Ontario and sell shares at a $10,000 profit. The capital gains tax calculator says the extra tax is $1,482.50, or 14.8% of the gain. Make it a $50,000 gain and the tax is $7,859.63, about 15.7%. With a $95,000 gain the bill is $17,450.83, which is 18.4% of the gain.
Notice the rate creeps up. A big gain pushes part of your income into higher brackets, so a large sale in one year costs more per dollar than the same gain would if you could spread it across two years, which is worth thinking about when the timing of a sale is up to you. It isn’t always.
A few notes on those figures. The calculator adds federal and provincial tax together, so it doesn’t show the federal part alone. The lifetime exemption is an option you switch on, and capital losses you’d carry over aren’t included.
Can losses lower the bill?
Yes. Capital losses can offset capital gains. The CRA page describes losses as receiving different treatment from other losses and says they may reduce your taxable income. The carry-back and carry-forward rules have conditions, so read the guide before you claim a loss from an earlier year.
Registered accounts change the picture, because tax on growth inside them is handled under different rules. Our TFSA calculator shows how a tax-free account can grow, and the RRSP withdrawal tax calculator shows what a withdrawal costs later.
When do you report a gain?
On the return for the year you sold, not the year you bought. That sounds obvious, but it matters when you’re deciding when to sell. If you have a choice, think about what else you’ll earn in each year, because a gain stacked on a high-income year is taxed at higher rates than the same gain in a quieter one. The exact date a sale counts can depend on the asset, so check the CRA guide for yours if a sale lands near December 31.
Mistakes with capital gains
People forget the selling costs, and that raises the gain. Others use the wrong cost, especially for shares bought over several years, when the last price you paid is not the number the CRA wants. Check the guide on how to work out cost for identical shares.
Another one: assuming a sale without a cash deposit isn’t taxable. A gift or a transfer of some assets can count as a sale at market value. Cases vary, so ask before you transfer something valuable.
Finally, crypto and foreign assets have their own reporting quirks, and we’ve left them out on purpose. The taxman wants the numbers either way, so look up the rules for those separately.
What this page is based on
The 50% figure and the cancellation come from the Canada Revenue Agency and a Prime Minister’s release of 21 March 2025. The lifetime exemption comes from a CRA indexation table. Example taxes come from our calculator, using 2026 federal and Ontario rates. This site isn’t affiliated with any government.
Frequently asked questions
How much of a capital gain is taxable in Canada?
Half is the working figure. We could not find one CRA page stating the 2026 rate, so check before a large sale.
Was the two-thirds inclusion rate cancelled?
Yes. The proposal was cancelled in the Prime Minister's release of 21 March 2025.
Is my main home taxed when I sell it?
Usually not, if you designate it as your principal residence. You still report the sale.
Where do I report a capital gain?
On Schedule 3, with the taxable amount on line 12700 of your return.
What does a $10,000 gain cost in Ontario?
About $1,482.50 in extra tax for someone earning $90,000, using 2026 rates in our calculator.
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