When you sell an investment — stocks, real estate, crypto, or a business — for more than you paid, the profit is called a capital gain. In Canada, capital gains are taxable, but not the full amount. Only a portion is included in your income, which is then taxed at your marginal rate.
This guide explains exactly how capital gains tax works in Canada for 2026, with examples, rates, exemptions, and how to report it on your tax return.
Canada does not tax 100% of your capital gain — it only includes a portion in your taxable income. This is called the inclusion rate.
Individuals: 50% inclusion rate on capital gains up to $250,000 per year
Individuals: 66.67% inclusion rate on capital gains above $250,000 per year
Corporations and trusts: 66.67% inclusion rate on all capital gains
This means if you sell stocks for a $10,000 gain, only $5,000 is added to your taxable income (at the 50% rate). You then pay tax on that $5,000 at your marginal tax rate — not a flat capital gains rate.
There is no separate capital gains tax rate in Canada. The taxable portion of your gain is added to your other income and taxed at your combined federal + provincial marginal rate.
| Province | Top Marginal Rate | Effective Rate on Capital Gain (50% inclusion) |
|---|---|---|
| Ontario | 53.53% | 26.77% |
| British Columbia | 53.50% | 26.75% |
| Alberta | 48.00% | 24.00% |
| Quebec | 53.31% | 26.66% |
| Nova Scotia | 54.00% | 27.00% |
| Manitoba | 50.40% | 25.20% |
| Saskatchewan | 47.50% | 23.75% |
Note: These are top marginal rates. Your actual rate depends on your total income for the year.
When you sell stocks, mutual funds, or ETFs in a non-registered account (not RRSP or TFSA) for a profit, the gain is taxable. Selling at a loss creates a capital loss that can offset other gains.
Selling a rental property, cottage, or investment property triggers capital gains tax on the profit. Your principal residence (the home you live in) is generally exempt — see below.
CRA treats crypto as property, not currency. Every time you sell, trade, or use crypto to buy something, it is a taxable event. The gain or loss is calculated in Canadian dollars at the time of the transaction.
Selling a business or business assets can trigger capital gains. The Lifetime Capital Gains Exemption (LCGE) may apply — see below.
If you sell your home, the gain is usually completely tax-free under the Principal Residence Exemption (PRE) — as long as the home was your principal residence for every year you owned it.
Even if your home sale is fully exempt, you must still report it on your tax return in the year of sale. CRA requires disclosure of all principal residence sales. Failure to report can result in penalties.
The LCGE shields a significant amount of capital gains from tax when selling certain qualifying assets:
This is one of the most valuable tax breaks available to Canadian business owners. If you plan to sell your business, proper planning well in advance can save hundreds of thousands in tax.
When you sell an asset for less than you paid, you have a capital loss. Capital losses can:
If you sell a stock at a loss and repurchase the same stock within 30 days before or after the sale, CRA disallows the capital loss. This is called the superficial loss rule. Wait at least 31 days before repurchasing the same security if you want to claim the loss.
Your ACB is what you originally paid for the asset, including commissions and fees. For stocks purchased multiple times, it is the average cost per share across all purchases. Keeping accurate ACB records is your responsibility — your broker only reports proceeds, not your cost.
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