This calculator helps you calculate capital gains tax in Canada on the sale of property and stocks taking into consideration the new capital gains tax which came into effect on Jun 25th, 2024.
What is capital gains tax?
Capital gains tax is a fee paid on the increase in value of investments or assets from their original purchase price. When sold for more than the purchase price, this results in a capital gain, which is taxable. Capital gains can be “realized” when sold, or “unrealized” when value increases but the asset isn’t sold yet. While unrealized gains aren’t taxed until sold, it’s essential to consult a tax professional for personalized advice due to varying financial situations.
What is a capital gains loss?
A capital loss occurs when you sell an investment or asset for less than its original purchase price. This loss is the difference between the purchase price and the lower sale price. Similar to capital gains, capital losses can be “realized” when the sale occurs, or “unrealized” when the asset’s value decreases but hasn’t been sold. While unrealized losses can indicate a drop in value, they aren’t counted for tax purposes until the asset is sold. Realized capital losses can offset capital gains and reduce taxable income. As with all financial matters, consulting a tax professional is advisable to understand the implications for your specific situation.
New capital gains tax in Canada
New changes were made to capital gains tax in Canada which target high income individuals who realize substantial capital gains each year. This change can also have a impact on individuals who are disposing of other personal property that would not be expempt under the principal tax exemption such as cottages, rental properties, farms and shares of private corporations.
There were changes to the tax in Canada that came into effect on June 25th, 2024 these are the changes and how they will impact tax on capital gains.
- The amount of capital gains that will be increased from 50% (1/2) to 67% (2/3) on capital gains in excess of $250,000 in a year.
- For capital gains that are under $250,000 in a year the inclusion rate for individuals will remain at 50%.
- The inclusion rate for capital gains for corporations and trusts will increase to 67% on all capital gains.
Capital gains tax inclusion rates under new rules
These are the new inclusion rates under the rules effective June 25th, 2024:
| Amount of Capital Gain | Inclusion Rate |
|---|---|
| Below $250,000 | 50% (1/2) |
| Above $250,000 | 67% (2/3) |
What is a capital gain in Canada?
A capital gain occurs in Canada when you sell capital property for more than the adjusted cost base if you were to sell the capital property for less than the adjusted cost base (ABC) you would have a capital loss.
Adjusted Cost Base (ABC): The initial cost of the capital property plus any other costs asociated with purchasing or making improvements the capital property, such as commissions, accounting and legal fees or improvements.
How do you calculate tax on capital gains?
There are a few key components that you need to have the information for in order to calculate the tax on a capital gain. The first key piece of information is the proceeds from distribution, the next is the adjusted cost base (ACB) and lastly you have the expenses that were incurred to make the sale. Let’s go over these terms and then work through an example to help you calculate the tax on a capital gain.
What is the adjusted cost base (ACB)?
The adjusted cost base includes the cost of the asset in addition to any expenses to acquire the asset.
In the case of a real estate transaction, the adjusted cost base would be the cost of the property or sale price in addition to any commissions paid to real estate agents or lawyers. It would also include other costs such as land transfer tax, as all of these costs were necessary to acquire the property.
If you purchased stocks, the adjusted cost base would be the purchase price of the stocks in addition to any transaction fees that you paid to purchase the stocks. If you purchased they same companies stock at various times and price points, the adjusted cost base would be an average since stocks are identical.
What are proceeds of disposition?
The next relevant term in calculating your capital gain is proceeds of disposition. This refers to the amount that you received from the sale of property. In the case of a real estate transaction this would be the sale price of the home. If you were selling stock this would be the fair market value that you sold them for.
What is considered an expense for purposes of calculating capital gains?
The last piece that must be understood to calculated a capital gain are relevant expenses. Much like how expenses are included in the adjusted cost base, they can be taken from the proceeds of disposition since they effectively lower your overall profit on the transaction. Expenses incurred to sell capital property such as real estate would include commissions, legal fees, land transfer taxes and any other costs such as advertising.
Capital gains calculation formula
Capital Gains = Proceeds of disposition - (Adjusted Cost Base + Expenses)
Now that you understand the formula for calculating capital gains which is Proceeds of disposition less the adjusted cost base less expenses we can work through an eample.
How to avoid capital gains tax on property in Canada
When selling a property in Canada you are able to avoid paying any capital gains tax if your property served as a principal residence while it was owned. If you meet the principal residence exemption critera you are able to designate the propert as your principal residence and any capital gains will not be taxed.
Capital gains tax rates by Province in Canada
These are the capital gains tax rates broken down by marginal tax limit in all of the Canadian provinces for the 2024 tax year.
Capital Gains Tax Rates in Ontario
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $15,705 | 0% |
| $15,706 | $18,062 | 7.5% |
| $18,063 | $23,726 | 12.55% |
| $23,727 | $51,446 | 10.03% |
| $51,447 | $55,867 | 12.08% |
| $55,868 | $90,595 | 14.83% |
| $90,596 | $102,894 | 15.74% |
| $102,895 | $106,735 | 16.95% |
| $106,736 | $111,733 | 18.95% |
| $111,734 | $150,000 | 21.7% |
| $150,001 | $173,205 | 22.48% |
| $173,206 | $220,000 | 24.14% |
| $220,001 | $246,752 | 24.92% |
| $246,753 | Infinity | 26.76% |
Capital Gains Tax Rates in British Columbia
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $15,705 | 0% |
| $15,706 | $23,390 | 7.5% |
| $23,391 | $24,338 | 10.03% |
| $24,339 | $39,703 | 11.81% |
| $39,704 | $47,937 | 10.03% |
| $47,938 | $55,867 | 11.35% |
| $55,868 | $95,875 | 14.1% |
| $95,876 | $110,076 | 15.5% |
| $110,077 | $111,733 | 16.4% |
| $111,734 | $133,664 | 19.15% |
| $133,665 | $173,205 | 20.35% |
| $173,206 | $181,232 | 22.01% |
| $181,233 | $246,752 | 23.06% |
| $246,753 | $252,752 | 24.9% |
| $252,753 | Infinity | 26.75% |
Capital Gains Tax Rates in Alberta
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $15,705 | 0% |
| $15,706 | $21,885 | 7.5% |
| $21,886 | $55,867 | 12.5% |
| $55,868 | $111,733 | 15.25% |
| $111,734 | $148,269 | 18% |
| $148,270 | $173,205 | 19% |
| $173,206 | $177,922 | 20.66% |
| $177,923 | $237,230 | 21.16% |
| $237,231 | $246,752 | 21.66% |
| $246,753 | $355,845 | 23.5% |
| $355,846 | Infinity | 24% |
Capital Gains Tax Rates in Manitoba
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $15,705 | 0% |
| $15,706 | $15,780 | 7.5% |
| $15,781 | $47,000 | 12.9% |
| $47,001 | $55,867 | 13.88% |
| $55,868 | $100,000 | 16.63% |
| $100,001 | $111,733 | 18.95% |
| $111,734 | $173,205 | 21.7% |
| $173,206 | $246,752 | 23.36% |
| $246,753 | Infinity | 25.2% |
Capital Gains Tax Rates in Saskatchewan
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $15,705 | 0% |
| $15,706 | $18,491 | 7.5% |
| $18,492 | $52,057 | 12.75% |
| $52,058 | $55,867 | 13.75% |
| $55,868 | $111,733 | 16.5% |
| $111,734 | $148,734 | 19.25% |
| $148,735 | $173,205 | 20.25% |
| $173,206 | $246,752 | 21.91% |
| $246,753 | Infinity | 23.75% |
Capital Gains Tax Rates in New Brunswick
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $15,705 | 0% |
| $15,706 | $21,342 | 7.5% |
| $21,343 | $47,343 | 13.7% |
| $47,344 | $49,958 | 12.2% |
| $49,959 | $55,867 | 14.5% |
| $55,868 | $99,916 | 17.25% |
| $99,917 | $111,733 | 18.25% |
| $111,734 | $173,205 | 21% |
| $173,206 | $185,064 | 22.66% |
| $185,065 | $246,752 | 24.41% |
| $246,753 | Infinity | 26.25% |
Capital Gains Tax Rates in Newfoundland & Labrador
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $15,705 | 0% |
| $15,706 | $22,013 | 7.5% |
| $22,014 | $23,390 | 11.85% |
| $23,391 | $29,478 | 19.85% |
| $29,479 | $43,198 | 11.85% |
| $43,199 | $55,867 | 14.75% |
| $55,868 | $86,395 | 17.5% |
| $86,396 | $111,733 | 18.15% |
| $111,734 | $154,244 | 20.9% |
| $154,245 | $173,205 | 21.9% |
| $173,206 | $215,943 | 23.56% |
| $215,944 | $246,752 | 24.56% |
| $246,753 | $275,870 | 26.4% |
| $275,871 | $551,739 | 26.9% |
| $551,740 | $1,103,478 | 27.15% |
| $1,103,479 | Infinity | 27.4% |
Capital Gains Tax Rates in Nova Scotia
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $14,894 | 0% |
| $14,895 | $15,000 | 4.4% |
| $15,001 | $15,705 | 6.9% |
| $15,706 | $21,000 | 14.4% |
| $21,001 | $25,000 | 11.9% |
| $25,001 | $29,590 | 12.16% |
| $29,591 | $55,867 | 15.24% |
| $55,868 | $59,180 | 17.99% |
| $59,181 | $75,000 | 18.59% |
| $75,001 | $93,000 | 19% |
| $93,001 | $111,733 | 21.75% |
| $111,734 | $150,000 | 23.5% |
| $150,001 | $246,752 | 25.16% |
| $246,753 | Infinity | 27% |
Capital Gains Tax Rates in Prince Edward Island
| Lower Marginal Tax Limit | Upper Marginal Tax Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $15,705 | 0% |
| $15,706 | $17,127 | 7.5% |
| $17,128 | $21,500 | 12.33% |
| $21,501 | $28,500 | 14.83% |
| $28,501 | $32,656 | 12.33% |
| $32,657 | $55,867 | 14.32% |
| $55,868 | $64,313 | 17.07% |
| $64,314 | $105,000 | 18.58% |
| $105,001 | $111,733 | 19.25% |
| $111,734 | $140,000 | 22% |
| $140,001 | $173,205 | 22.38% |
| $173,206 | $246,752 | 24.03% |
| $246,753 | Infinity | 25.88% |
