Updated Checked by the Tax-Services.ca editorial team How we check
No, Canada doesn’t tax unrealized gains. If your shares are worth $10,000 more than you paid, you owe nothing on that jump until you sell them, or until the CRA treats you as having sold them. When that day comes, half of the gain is added to your income (that’s the 2025 inclusion rate in the CRA guide).
What counts as an unrealized gain?
It’s the rise in value of something you still own. You see it on a brokerage statement or a home estimate, but it isn’t income. The tax system waits for a disposition, which usually means a sale. Only then do you compare the proceeds with your adjusted cost base, the price you paid plus costs like commissions. The CRA’s page on line 12700 ties the reporting of capital gains to selling or disposing of property during the year, and says nothing about taxing paper gains.
That’s why holding an investment defers tax. A stock that doubles over ten years is taxed once, in the year you sell. Dividends and interest paid along the way are another story, and they’re taxed as they arrive.
When does the CRA act as if you sold?
A few events create a sale on paper. The gain is worked out at fair market value even though no money changes hands. These are the ones people run into.
| Event | What the CRA does |
|---|---|
| You hold an investment | No tax on the unrealized gain |
| You sell at a profit | Capital gain reported for that year |
| You die | Capital property is treated as sold at fair market value just before death, and the gain goes on the final return |
| Property passes to a spouse or common-law partner | A nil gain may be reported if certain conditions are met |
| You give property away | Treated as a sale at fair market value |
| You leave Canada | Most property is treated as sold at fair market value on the day you leave (departure tax) |
| Your property is expropriated or swapped for other property | Treated as a sale |
How much tax on a $10,000 gain in Ontario?
Say you bought shares for $20,000 and they’re now worth $30,000. Today you owe nothing. Sell them with $90,000 of other taxable income, and the capital gains tax calculator adds $5,000 (half the gain) to your income. The extra tax is $1,482.50, or 14.8% of the gain, so you keep $8,517.50.
And if the shares slide back to $20,000 before you sell? The paper gain vanishes and no tax was ever due.
A bigger gain pushes the average rate up. Before you pick the year for a large sale, check where your next dollar lands with the marginal tax rate calculator.
What does the deemed sale at death look like in numbers?
Picture a widower in Halifax who bought shares years ago for $40,000. On the day he dies they’re worth $100,000. The gain is $60,000, and with the one-half inclusion rate, $30,000 lands on his final return as income, on top of whatever else he earned that year. If the shares go to a spouse and the conditions are met, a nil gain may be reported instead and the tax waits.
The figures here are simple on purpose. Estates often have other pieces, such as a home that qualified as a principal residence, so the executor should check the CRA’s pages for the details.
Leaving Canada with unrealized gains
This is the one that catches people out. On the day you stop being a resident, you’re treated as having sold most of your property at fair market value and bought it back at the same price. Canadian real estate, Canadian business property and registered plans such as an RRSP or TFSA are left out. You report the rest on Form T1243.
You can elect to put off paying until you actually sell, using Form T1244, by April 30 of the year after you leave. The CRA wants security when the federal tax on the deemed sale is over $16,500 ($13,777.50 for former Quebec residents).
Death works the same way on the final return. Executors should estimate the bill early, because decades of growth can add up. Run the numbers for the year with the income tax calculator. Money coming out of an RRSP is taxed under a different rule, so use the RRSP withdrawal tax calculator for that.
Where people go wrong
The biggest mistake is assuming a rising portfolio creates a bill. It doesn’t. The next one is thinking a gift to your kids is tax free. It’s still a sale at market value in the CRA’s eyes.
Keep records of what you paid, including reinvested distributions. Miss those and your cost base looks too low and your gain too high.
The calculator uses half of a gain as taxable and only covers Ontario here. Other provinces, the lifetime exemption for small business shares, and capital losses aren’t modelled. Trusts, foreign property and private company shares follow their own rules, and for a large holding or a move abroad a tax accountant earns their fee.
Sources, and how we checked them
The definition of a capital gain and the one-half inclusion rate for 2025 come from the Canada Revenue Agency guide on capital gains. The deemed sale on death and on emigration, the exempt property list, the April 30 election date and the security amounts come from other CRA pages on those topics. The example uses 2026 Ontario tax data on this site, and the Halifax case is our own arithmetic. No government body is connected to this website.
Frequently asked questions
Does Canada tax unrealized gains?
No. A gain is taxed when you sell or are treated as having sold the property, not while you hold it.
What is a deemed disposition?
It is a sale on paper at fair market value. It happens on death, on a gift, and when you leave Canada, among other events.
Is there an exit tax when I leave Canada?
Most property is treated as sold at fair market value when you leave. Canadian real estate, Canadian business property and registered plans are exempt.
Can I delay the tax after emigrating?
You can elect to defer payment on Form T1244 by April 30 of the following year. Security may be needed for larger amounts.
What share of a capital gain is taxed?
The CRA guide for 2025 states an inclusion rate of one half, so half of the gain is added to income.
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