{"id":890,"date":"2023-12-03T22:36:44","date_gmt":"2023-12-04T03:36:44","guid":{"rendered":"http:\/\/localhost\/mrc_blog\/personal-finance\/capital-gains-tax-canada-explained\/"},"modified":"2023-12-03T22:36:47","modified_gmt":"2023-12-04T03:36:47","slug":"capital-gains-tax-canada","status":"publish","type":"post","link":"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/","title":{"rendered":"Capital Gains Tax Canada Explained"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_17 counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" style=\"display: none;\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list ez-toc-list-level-1\"><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/#Capital_Gains_Tax_Canada_What_you_need_to_know\" title=\"Capital Gains Tax Canada: What you need to know\">Capital Gains Tax Canada: What you need to know<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/#What_is_a_Capital_Gain\" title=\"What is a Capital Gain?\">What is a Capital Gain?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/#What_is_Capital_Gain_Tax\" title=\"What is Capital Gain Tax? \">What is Capital Gain Tax? <\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/#Capital_Gain_Example\" title=\"Capital Gain Example\">Capital Gain Example<\/a><ul class=\"ez-toc-list-level-3\"><li class=\"ez-toc-heading-level-3\"><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/#CAPG_Shares\" title=\"CAPG Shares\">CAPG Shares<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-3\"><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/#CAPL_Shares\" title=\"CAPL Shares\">CAPL Shares<\/a><\/li><\/ul><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/#Documents_for_Taxation\" title=\"Documents for Taxation\">Documents for Taxation<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time:<\/span> <span class=\"rt-time\">2<\/span> <span class=\"rt-label rt-postfix\">Min<\/span><\/span><h2><span class=\"ez-toc-section\" id=\"Capital_Gains_Tax_Canada_What_you_need_to_know\"><\/span><strong>Capital Gains Tax Canada: What you need to know<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>A capital gain arises when the value of your investment on the market or selling price is greater than the original price you paid. Whenever you earn a capital gain it\u2019s wonderful! However, the downside is you\u2019re required to pay taxes on capital gains. You can learn more about what a capital gain is and how <a href=\"https:\/\/www.investopedia.com\/terms\/t\/taxation.asp\" target=\"_blank\" rel=\"noopener nofollow\"><strong>taxation<\/strong><\/a> works below.<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_Capital_Gain\"><\/span><strong>What is a Capital Gain?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>Generally speaking, a capital gain is the increase in value of an investment, such as stocks, real estate or shares. When your investment\u2019s value increases, you are required to pay tax on it, but more on that later.<\/p>\n<p>&nbsp;<\/p>\n<p>A capital gain can be either realized or unrealized. A <strong>realized capital gain<\/strong> occurs when you sell an investment and the selling price is greater than the original price. An <strong>unrealized capital gain<\/strong> occurs when the market value of an investment is greater than the original price, but you still hold the investment. You\u2019re only required to pay tax when your capital gain is realized or, in other words, you sold it.<\/p>\n<p>&nbsp;<\/p>\n<p>A capital loss is also possible. This is when the sale or market price is less than the original price. Capital losses have tax advantages because they can be used to offset the tax effect of capital gains.<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Capital_Gain_Tax\"><\/span><strong>What is Capital Gain Tax? <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>As mentioned, you\u2019re required to pay tax on realized capital gains. Unfortunately, there isn\u2019t a specific tax rate for capital gains. Instead, when you incur a capital gain in Canada, 50% of the capital gain is taxable. This amount is included in your income the year you incurred the <a href=\"https:\/\/www.investopedia.com\/terms\/c\/capitalgain.asp\" target=\"_blank\" rel=\"noopener nofollow\"><strong>capital gain<\/strong><\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>If you also have a capital loss, you can offset the capital gain amount. A capital loss cannot be deducted unless there is a capital gain to set it off. If you only have a capital loss and no capital gain, don\u2019t worry, you can carry it forward indefinitely or backwards 3 tax years.<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Capital_Gain_Example\"><\/span><strong>Capital Gain Example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>Let\u2019s say you purchased CAPG shares for $1,000 three years ago and sold them for $2,000 this year. In order to sell the shares, you incurred a $50 fee. You also purchased CAPL shares a year ago for $1,000 and sold them for $500 this year. You incurred a $20 fee to complete this sale. Your net capital gain would be as follows:<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<table style=\"height: 605px\" width=\"624\">\n<tbody>\n<tr style=\"height: 53px\">\n<td style=\"height: 53px;width: 614px\" colspan=\"2\">\n<h3><span class=\"ez-toc-section\" id=\"CAPG_Shares\"><\/span><strong>CAPG Shares<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\">Selling Price<\/td>\n<td style=\"height: 46px;width: 304px\">$2,000<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\">Original Price<\/td>\n<td style=\"height: 46px;width: 304px\">$1,000<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\">Selling Fee<\/td>\n<td style=\"height: 46px;width: 304px\">-$50<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\"><strong>Capital Gain<\/strong><\/td>\n<td style=\"height: 46px;width: 304px\"><strong>$950<\/strong><\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\"><em>Taxable Capital Gain (50%)<\/em><\/td>\n<td style=\"height: 46px;width: 304px\"><em>$475<\/em><\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 614px\" colspan=\"2\">\n<h3><span class=\"ez-toc-section\" id=\"CAPL_Shares\"><\/span><strong>CAPL Shares<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\">Selling Price<\/td>\n<td style=\"height: 46px;width: 304px\">$500<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\">Original Price<\/td>\n<td style=\"height: 46px;width: 304px\">$1,000<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\">Selling Fee<\/td>\n<td style=\"height: 46px;width: 304px\">-$20<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\">Capital Loss<\/td>\n<td style=\"height: 46px;width: 304px\">-$520<\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\"><em>Taxable Capital Loss (50%)<\/em><\/td>\n<td style=\"height: 46px;width: 304px\"><em>-$260<\/em><\/td>\n<\/tr>\n<tr style=\"height: 46px\">\n<td style=\"height: 46px;width: 304px\"><em>Net Taxable Capital Gain ($475 &#8211; $260)<\/em><\/td>\n<td style=\"height: 46px;width: 304px\"><em>$215<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>As you can see in the above table, your net capital gain would be $215. You would be required to include this amount in your taxable income. The amount of tax you pay depends on your tax bracket.<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Documents_for_Taxation\"><\/span><strong>Documents for Taxation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p>When it comes to taxation, it\u2019s always good practice to keep documentation proving the amount of money you paid and the amount of money you earned in relation to your investments. If the CRA questions or audits your capital gains or losses, you\u2019ll have proof handy.<\/p>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time:<\/span> <span class=\"rt-time\">2<\/span> <span class=\"rt-label rt-postfix\">Min<\/span><\/span> Capital Gains Tax Canada: What you need to know &nbsp; A capital gain arises when the value of your investment on the market or selling price is greater than the original price you paid. Whenever you earn a capital gain it\u2019s wonderful! However, the downside is you\u2019re required to pay taxes on capital gains. You&hellip; <a class=\"more-link\" href=\"https:\/\/myratecompass.ca\/blog\/personal-finance\/capital-gains-tax-canada\/\">Continue reading <span class=\"screen-reader-text\">Capital Gains Tax Canada Explained<\/span><\/a><\/p>\n","protected":false},"author":5,"featured_media":6409,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"footnotes":""},"categories":[10],"tags":[21],"class_list":["post-890","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance","tag-blog-post-template-1-main-template-to-use","entry"],"aioseo_notices":[],"featured_image_urls":{"full":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax.png",924,693,false],"thumbnail":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-150x150.png",150,150,true],"medium":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-300x225.png",300,225,true],"medium_large":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-768x576.png",750,563,true],"large":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-1024x768.png",750,563,true],"1536x1536":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-1536x1152.png",924,693,true],"2048x2048":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax.png",924,693,false],"post-thumbnail":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-1568x1176.png",924,693,true],"post-image-medium":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-333x250.png",333,250,true]},"post_excerpt_stackable":"<p>Table of Contents Capital Gains Tax Canada: What you need to knowWhat is a Capital Gain?What is Capital Gain Tax? Capital Gain ExampleCAPG SharesCAPL SharesDocuments for Taxation Reading Time: 2 MinCapital Gains Tax Canada: What you need to know &nbsp; A capital gain arises when the value of your investment on the market or selling price is greater than the original price you paid. Whenever you earn a capital gain it\u2019s wonderful! However, the downside is you\u2019re required to pay taxes on capital gains. You can learn more about what a capital gain is and how taxation works below. &nbsp;&hellip;<\/p>\n","category_list":"<a href=\"https:\/\/myratecompass.ca\/blog\/.\/personal-finance\/\" rel=\"category tag\">Personal Finance<\/a>","author_info":{"name":"Mohamed Konate","url":"https:\/\/myratecompass.ca\/blog\/author\/mohamedkonate\/"},"comments_num":"0 comments","featured_image_urls_v2":{"full":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax.png",924,693,false],"thumbnail":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-150x150.png",150,150,true],"medium":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-300x225.png",300,225,true],"medium_large":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-768x576.png",750,563,true],"large":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-1024x768.png",750,563,true],"1536x1536":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-1536x1152.png",924,693,true],"2048x2048":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax.png",924,693,false],"post-thumbnail":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-1568x1176.png",924,693,true],"post-image-medium":["https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax-333x250.png",333,250,true]},"post_excerpt_stackable_v2":"<p>Table of Contents Capital Gains Tax Canada: What you need to knowWhat is a Capital Gain?What is Capital Gain Tax? Capital Gain ExampleCAPG SharesCAPL SharesDocuments for Taxation Reading Time: 2 MinCapital Gains Tax Canada: What you need to know &nbsp; A capital gain arises when the value of your investment on the market or selling price is greater than the original price you paid. Whenever you earn a capital gain it\u2019s wonderful! However, the downside is you\u2019re required to pay taxes on capital gains. You can learn more about what a capital gain is and how taxation works below. &nbsp;&hellip;<\/p>\n","category_list_v2":"<a href=\"https:\/\/myratecompass.ca\/blog\/.\/personal-finance\/\" rel=\"category tag\">Personal Finance<\/a>","author_info_v2":{"name":"Mohamed Konate","url":"https:\/\/myratecompass.ca\/blog\/author\/mohamedkonate\/"},"comments_num_v2":"0 comments","jetpack_featured_media_url":"https:\/\/myratecompass.ca\/blog\/wp-content\/uploads\/2020\/05\/Capital-Gains-Tax.png","_links":{"self":[{"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/posts\/890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/comments?post=890"}],"version-history":[{"count":1,"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/posts\/890\/revisions"}],"predecessor-version":[{"id":5505,"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/posts\/890\/revisions\/5505"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/media\/6409"}],"wp:attachment":[{"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/media?parent=890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/categories?post=890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/myratecompass.ca\/blog\/wp-json\/wp\/v2\/tags?post=890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}