Capital Gains Tax Calculator 2025
Canada's only visual tax calculator. Calculate the tax you'll owe on investment sales, stock gains, real estate profits, and cryptocurrency. Get accurate federal and provincial tax calculations.
tl;dr
In Canada, 50% of your capital gain is added to your taxable income (the "inclusion rate"). This taxable portion is then taxed at your marginal rate, which combines federal and provincial rates.
Essential Information
Start with the basics - add income sources and other details below
Tax Details
Add income sources, deductions, and credits
Why Capital Gains Tax Matters
Capital gains tax affects every Canadian who sells investments, real estate (beyond principal residence), or cryptocurrency. Unlike employment income that's 100% taxable, only 50% of capital gains are included in taxable income, making this one of the most tax-efficient forms of income in Canada. However, many investors are surprised by their tax bill after selling investments because they don't account for how capital gains push them into higher tax brackets. A $50,000 capital gain adds $25,000 to your taxable income, which could significantly increase your marginal rate. Understanding your capital gains tax helps you make strategic decisions about when to sell investments, how to harvest losses to offset gains, and whether to trigger gains in low-income years. For real estate investors, capital gains tax is often the largest cost of a sale (besides the original purchase price). For active stock traders, it affects your net return on every profitable trade. Planning for capital gains tax is essential for maximizing after-tax investment returns.
How Capital Gains Tax Is Calculated
Capital gains tax in Canada follows a specific calculation process that differs from regular income:
- 1. Calculate Your Gain: Capital Gain = Sale Price - Purchase Price - Costs (like commissions, legal fees). For example, if you bought a stock for $10,000, sold it for $18,000, and paid $100 in fees, your gain is $7,900.
- 2. Apply the Inclusion Rate: Only 50% of your capital gain is taxable. This is called the inclusion rate. In our example, $7,900 × 50% = $3,950 taxable capital gain.
- 3. Add to Taxable Income: The taxable portion ($3,950) is added to your other income (employment, business, etc.) to determine your total taxable income.
- 4. Calculate Tax at Marginal Rate: The taxable capital gain is taxed at your marginal rate (federal + provincial combined). If you're in a 33% combined bracket, you'll pay $3,950 × 33% = $1,303.50 in tax.
- 5. Effective Capital Gains Rate: Because only 50% is taxable, your effective rate on the full gain is half your marginal rate. In a 33% bracket, you effectively pay 16.5% on capital gains.
- 6. Capital Loss Offsetting: Capital losses can offset capital gains in the current year, the previous 3 years, or carried forward indefinitely. This is a powerful tax planning tool.
Real Capital Gains Tax Examples
Stock Sale - $70,000 Income
Earned $70,000 employment income, sold stocks for $20,000 capital gain. Ontario resident, combined marginal rate 31.48% on the capital gain portion.
Taxable capital gain: $10,000 (50% of $20,000). Tax owing on gain: approximately $3,148. After-tax gain: $16,852.
Real Estate Investment - $100,000 Income
Earned $100,000, sold rental property for $80,000 capital gain after costs. British Columbia resident, marginal rate 38.29% on the capital gain portion.
Taxable capital gain: $40,000 (50% of $80,000). Tax owing on gain: approximately $15,316. After-tax gain: $64,684. Note: This pushed taxpayer into higher bracket.
Cryptocurrency Sale - $50,000 Income
Earned $50,000, sold cryptocurrency for $15,000 capital gain. Alberta resident, combined marginal rate 30.50% on the capital gain portion.
Taxable capital gain: $7,500 (50% of $15,000). Tax owing on gain: approximately $2,288. After-tax gain: $12,712. CRA treats crypto like any other capital property.
Common Questions
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.
What To Do After Calculating Your Capital Gains Tax
- ✓ Set Aside Tax Money: Put aside the calculated tax amount immediately. Don't spend your full gain - the tax bill comes when you file your return.
- ✓ Consider Tax-Loss Harvesting: If you have losing investments, selling them before year-end can offset your gains and reduce tax owing.
- ✓ Make Quarterly Installments: If you owe more than $3,000 in taxes (including capital gains tax), CRA may require quarterly installment payments to avoid interest charges.
- ✓ Maximize RRSP Contributions: Use RRSP contributions to offset the added income from capital gains, reducing your marginal rate and overall tax bill.
- ✓ Plan Future Sales: If you have flexibility on timing, consider spreading large gains over multiple years to stay in lower tax brackets.
- ✓ Keep Detailed Records: Maintain records of all purchases, sales, and costs for at least 6 years. For investments, track your adjusted cost base (ACB) carefully.
- ✓ Consult a Tax Professional: For complex situations (like real estate development, deemed dispositions, or business income questions), professional advice is invaluable.
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