How are capital gains taxed in Canada?

In Canada, only 50% of your capital gain is included in your taxable income (called the "inclusion rate"). This taxable portion is then added to your other income and taxed at your marginal tax rate. For example, a $40,000 capital gain results in $20,000 of taxable income. If your marginal rate is 30%, you pay $6,000 in tax on the gain — an effective rate of 15% on the full gain.

What is the capital gains inclusion rate for 2026?

For individuals, the capital gains inclusion rate is 50% for 2026. This means half of your capital gain is added to your taxable income. The inclusion rate applies to gains on stocks, bonds, real estate (other than your principal residence), cryptocurrency, and other capital property.

How do I calculate my capital gain?

Your capital gain equals the sale price minus the adjusted cost base (ACB) minus any selling expenses. The ACB is typically your purchase price plus any acquisition costs (legal fees, commissions). Selling expenses include broker commissions, legal fees, and real estate agent commissions. If the result is negative, you have a capital loss instead.

What is NOT a capital gain in Canada?

Several common financial events are NOT capital gains: (1) Selling your principal residence is exempt under the Principal Residence Exemption. (2) Gains inside a TFSA or RRSP are tax-sheltered. (3) Lottery and gambling winnings are not taxable. (4) Receiving a gift or inheritance does not trigger a capital gain for the recipient. (5) Life insurance proceeds are not taxable to the beneficiary. The person who gives a gift or the estate of a deceased person may have a deemed disposition, however.

Is selling my home a capital gain?

If the property is your principal residence and you lived in it for every year you owned it, the entire gain is exempt under the Principal Residence Exemption (PRE). You must designate it as your principal residence on your tax return using Form T2091. If you only lived there for part of the ownership period or had rental income from it, a portion of the gain may be taxable. Each family unit can designate only one property per year as their principal residence.

Are gains in my TFSA or RRSP taxable?

No. Investment gains (including capital gains) inside a TFSA are completely tax-free — both while invested and when withdrawn. RRSP gains are tax-deferred: you don't pay tax on gains while invested, but all withdrawals are taxed as regular income (not as capital gains). This means RRSP withdrawals lose the 50% inclusion rate advantage. For assets expected to generate large capital gains, a TFSA may be more tax-efficient than an RRSP.

Can I use capital losses to reduce my taxes?

Yes. Capital losses can only offset capital gains, not other income. If your capital losses exceed your gains in a year, the net capital loss can be carried back 3 years or carried forward indefinitely to offset gains in other years. You must report both gains and losses on Schedule 3 of your T1 return. Superficial loss rules prevent claiming a loss if you repurchase the same security within 30 days.

What is the Lifetime Capital Gains Exemption (LCGE)?

The LCGE allows Canadian residents to shelter up to $1,250,000 (2025 amount, indexed annually) of capital gains on the sale of qualifying small business corporation shares, or qualified farm or fishing property. This is a cumulative lifetime limit. The exemption must be claimed on your tax return and requires that the shares or property meet specific conditions regarding Canadian-controlled private corporations or active farming/fishing use.

How is cryptocurrency taxed in Canada?

The CRA treats cryptocurrency as a commodity. Selling, trading, or converting crypto triggers a capital gain or loss (the difference between fair market value at sale and your ACB). Trading one crypto for another is also a taxable disposition. If you're mining or trading crypto as a business, gains may be taxed as business income (100% taxable) rather than capital gains (50% taxable). The CRA considers factors like frequency, intention, and volume of trading.

When do I report capital gains to the CRA?

You must report capital gains in the tax year the disposition (sale, gift, or deemed disposition) occurs. Report gains and losses on Schedule 3 of your T1 return. Your brokerage typically provides a T5008 slip showing proceeds of disposition, but you are responsible for tracking your adjusted cost base. The filing deadline is April 30 (or June 15 for self-employed individuals), but any tax owing is due April 30.

Does the province I live in affect my capital gains tax?

Yes. While the 50% inclusion rate is set federally, the marginal rate applied to your taxable capital gain depends on your combined federal and provincial tax brackets. Provinces with lower rates (Alberta, Saskatchewan, the territories) result in lower capital gains tax, while provinces with higher rates (Nova Scotia, Newfoundland, Ontario, Quebec) result in higher tax. The province you reside in on December 31 determines your provincial tax rate for the entire year.

What are some strategies to minimize capital gains tax?

Common strategies include: (1) Holding investments in a TFSA where gains are tax-free. (2) Tax-loss harvesting — selling losers to offset gains. (3) Timing sales to low-income years. (4) Donating appreciated securities to charity (no capital gains tax + donation credit). (5) Using the principal residence exemption for your home. (6) Claiming the LCGE on qualifying small business shares. (7) Splitting gains across tax years when possible.

What's the difference between capital gains and regular income?

Capital gains receive preferential tax treatment - only 50% is taxable, versus 100% for employment income, interest, and foreign dividends. This means your effective tax rate on capital gains is half your marginal rate. For example, someone in a 40% tax bracket pays 40% on salary but only 20% effective rate on capital gains.

Do I pay capital gains tax on my principal residence?

No, your principal residence is exempt from capital gains tax in Canada through the Principal Residence Exemption (PRE). However, if you own multiple properties, only one can be your principal residence for any given year. You must designate which property is your principal residence when you sell.

Can I use capital losses to reduce my tax?

Yes! Capital losses can offset capital gains in the same year. If your losses exceed your gains, you can carry the loss back 3 years or forward indefinitely to offset future gains. This is called tax-loss harvesting and is a key strategy for investors. Note: Capital losses can only offset capital gains, not regular income.

How does CRA know about my capital gains?

Investment firms send T5008 slips showing your proceeds of disposition. You're required to track your adjusted cost base (ACB) and calculate gains yourself. For cryptocurrency, you must track and report all transactions - CRA is actively enforcing crypto reporting.

Are capital gains inside my TFSA or RRSP taxable?

No! Capital gains (and all investment income) inside registered accounts like TFSAs and RRSPs grow tax-free. This is one of the biggest advantages of registered accounts. TFSA gains are never taxed, even on withdrawal. RRSP gains are taxed as regular income when withdrawn, but grow tax-deferred.

What if I'm a day trader - is it still capital gains?

If CRA considers you a day trader running a business, your profits may be treated as business income (100% taxable) rather than capital gains (50% taxable). Factors include trading frequency, holding period, research conducted, and expertise. Most casual investors qualify for capital gains treatment.

How are capital gains taxed in Canada?

In Canada, only 50% of your capital gain is included in your taxable income (called the "inclusion rate"). This taxable portion is then added to your other income and taxed at your marginal tax rate. For example, a $40,000 capital gain results in $20,000 of taxable income. If your marginal rate is 30%, you pay $6,000 in tax on the gain — an effective rate of 15% on the full gain.

What is the capital gains inclusion rate for 2026?

For individuals, the capital gains inclusion rate is 50% for 2026. This means half of your capital gain is added to your taxable income. The inclusion rate applies to gains on stocks, bonds, real estate (other than your principal residence), cryptocurrency, and other capital property.

How do I calculate my capital gain?

Your capital gain equals the sale price minus the adjusted cost base (ACB) minus any selling expenses. The ACB is typically your purchase price plus any acquisition costs (legal fees, commissions). Selling expenses include broker commissions, legal fees, and real estate agent commissions. If the result is negative, you have a capital loss instead.

What is NOT a capital gain in Canada?

Several common financial events are NOT capital gains: (1) Selling your principal residence is exempt under the Principal Residence Exemption. (2) Gains inside a TFSA or RRSP are tax-sheltered. (3) Lottery and gambling winnings are not taxable. (4) Receiving a gift or inheritance does not trigger a capital gain for the recipient. (5) Life insurance proceeds are not taxable to the beneficiary. The person who gives a gift or the estate of a deceased person may have a deemed disposition, however.

Is selling my home a capital gain?

If the property is your principal residence and you lived in it for every year you owned it, the entire gain is exempt under the Principal Residence Exemption (PRE). You must designate it as your principal residence on your tax return using Form T2091. If you only lived there for part of the ownership period or had rental income from it, a portion of the gain may be taxable. Each family unit can designate only one property per year as their principal residence.

Are gains in my TFSA or RRSP taxable?

No. Investment gains (including capital gains) inside a TFSA are completely tax-free — both while invested and when withdrawn. RRSP gains are tax-deferred: you don't pay tax on gains while invested, but all withdrawals are taxed as regular income (not as capital gains). This means RRSP withdrawals lose the 50% inclusion rate advantage. For assets expected to generate large capital gains, a TFSA may be more tax-efficient than an RRSP.

Can I use capital losses to reduce my taxes?

Yes. Capital losses can only offset capital gains, not other income. If your capital losses exceed your gains in a year, the net capital loss can be carried back 3 years or carried forward indefinitely to offset gains in other years. You must report both gains and losses on Schedule 3 of your T1 return. Superficial loss rules prevent claiming a loss if you repurchase the same security within 30 days.

What is the Lifetime Capital Gains Exemption (LCGE)?

The LCGE allows Canadian residents to shelter up to $1,250,000 (2025 amount, indexed annually) of capital gains on the sale of qualifying small business corporation shares, or qualified farm or fishing property. This is a cumulative lifetime limit. The exemption must be claimed on your tax return and requires that the shares or property meet specific conditions regarding Canadian-controlled private corporations or active farming/fishing use.

How is cryptocurrency taxed in Canada?

The CRA treats cryptocurrency as a commodity. Selling, trading, or converting crypto triggers a capital gain or loss (the difference between fair market value at sale and your ACB). Trading one crypto for another is also a taxable disposition. If you're mining or trading crypto as a business, gains may be taxed as business income (100% taxable) rather than capital gains (50% taxable). The CRA considers factors like frequency, intention, and volume of trading.

When do I report capital gains to the CRA?

You must report capital gains in the tax year the disposition (sale, gift, or deemed disposition) occurs. Report gains and losses on Schedule 3 of your T1 return. Your brokerage typically provides a T5008 slip showing proceeds of disposition, but you are responsible for tracking your adjusted cost base. The filing deadline is April 30 (or June 15 for self-employed individuals), but any tax owing is due April 30.

Does the province I live in affect my capital gains tax?

Yes. While the 50% inclusion rate is set federally, the marginal rate applied to your taxable capital gain depends on your combined federal and provincial tax brackets. Provinces with lower rates (Alberta, Saskatchewan, the territories) result in lower capital gains tax, while provinces with higher rates (Nova Scotia, Newfoundland, Ontario, Quebec) result in higher tax. The province you reside in on December 31 determines your provincial tax rate for the entire year.

What are some strategies to minimize capital gains tax?

Common strategies include: (1) Holding investments in a TFSA where gains are tax-free. (2) Tax-loss harvesting — selling losers to offset gains. (3) Timing sales to low-income years. (4) Donating appreciated securities to charity (no capital gains tax + donation credit). (5) Using the principal residence exemption for your home. (6) Claiming the LCGE on qualifying small business shares. (7) Splitting gains across tax years when possible.

How do I report capital gains in Quebec?

Quebec residents must report capital gains on both their federal T1 return (Schedule 3) and their Quebec TP-1 return (Schedule G). Quebec applies its own provincial tax rates to taxable capital gains. The Quebec Abatement reduces federal tax by 16.5%, which partially offsets Quebec's higher provincial rates on capital gains income.

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Quebec Capital Gains Tax Calculator

Calculate capital gains tax in Quebec with accurate 2026 rates. Includes the Quebec Abatement, four provincial brackets, and Quebec-specific rules.

Capital Gains Tax Calculator

Enter your purchase and sale details, then click Calculate to see a detailed breakdown of your federal and provincial capital gains tax.

Tax Breakdown Effective Rate After-Tax Proceeds Fed vs Provincial Split

Capital Gains Calculator

Year

Province

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Transaction

Purchase Price

Sale Price

Costs & Commissions

Broker, legal, agent fees

Context

Other Taxable Income

Employment, interest, rental, etc.

Capital Loss Carry-Forward

Net capital losses from prior years

For a more detailed tax calculation with CPP, CPP2, EI, deductions, and credits, use the Visual Tax Calculator.

Capital Gains Tax by Province / Territory

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Capital Gains Tax in Quebec

Top CG Rate

26.65%

Combined marginal rate on capital gains

Effective Rate at Median

16.0%

~$70K income + $50K gain

Inclusion Rate

50%

Federal, for individuals

Overview

Quebec has a unique tax system with four provincial brackets ranging from 14% to 25.75%. The Quebec Abatement reduces federal tax by 16.5%, partially offsetting Quebec's higher provincial rates. The combined top marginal capital gains rate is 26.65%. Quebec's higher middle-bracket rates mean that moderate capital gains are taxed somewhat more heavily than in many other provinces.

Quebec Capital Gains Specifics

Quebec residents file a separate provincial tax return (TP-1) with Revenu Quebec, which has its own capital gains reporting requirements. Quebec offers a deduction for capital gains on qualifying small business corporation shares and farm/fishing property similar to the federal LCGE. The Quebec Abatement applies to all federal tax including tax on capital gains, providing some relief.

How Quebec Compares

Province	Top CG Rate
Nunavut	22.25%
Northwest Territories	23.53%
Saskatchewan	23.75%
Alberta	24.00%
Yukon	24.00%
Manitoba	25.08%
Prince Edward Island	25.29%
Quebec	26.65%
New Brunswick	26.65%
British Columbia	26.75%
Ontario	26.76%
Nova Scotia	27.00%
Newfoundland & Labrador	27.40%

Quebec Capital Gains Tax Calculator

Capital Gains Tax Calculator

Capital Gains Tax by Province / Territory

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Capital Gains Tax in Quebec

Top CG Rate

Effective Rate at Median

Inclusion Rate

Overview

Quebec Capital Gains Specifics

How Quebec Compares

Frequently Asked Questions

Search

Quebec Capital Gains Tax Calculator

Capital Gains Tax Calculator

Capital Gains Tax by Province / Territory

You might also be interested in...

Visual Canadian Tax Calculator

TFSA vs RRSP Calculator

Canada-wide Tax Comparison

Capital Gains Tax in Quebec

Top CG Rate

Effective Rate at Median

Inclusion Rate

Overview

Quebec Capital Gains Specifics

How Quebec Compares

Frequently Asked Questions

How are capital gains taxed in Canada?

What is the capital gains inclusion rate for 2026?

How do I calculate my capital gain?

What is NOT a capital gain in Canada?

Is selling my home a capital gain?

Are gains in my TFSA or RRSP taxable?

Can I use capital losses to reduce my taxes?

What is the Lifetime Capital Gains Exemption (LCGE)?

How is cryptocurrency taxed in Canada?

When do I report capital gains to the CRA?

Does the province I live in affect my capital gains tax?

What are some strategies to minimize capital gains tax?

How do I report capital gains in Quebec?