HomeThis calculator helps you calculate capital gains tax in Ontario 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 in Ontario?
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 in Ontario?
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 Ontario
New changes were made to capital gains tax in Ontario 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 Ontario 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 Ontario?
A capital gain occurs in Ontario 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 to calculate tax on capital gains in Ontario?
The formula to calculate tax on captail gains includes calculating the capital gain and multiplying the capital gain by the inclusion rate and tax rate.
Proceeds of disposition less Adjusted cost base (ACB) plus Expenses equals Captial gain / loss
