Canada Capital Gains Tax Calculator 2023
Looking for a Canada Capital Gains Tax Calculator? We have you covered. Below we outline everything you need to know about capital gains in Canada, and even provide you a manual calculation to get you on track.
Key Takeaways
- A Canada Capital Gains Tax Calculator formula that will allow you to manually crunch numbers and get your rate.
- In Canada, 50% of the value of any capital gains is taxable: If you sell an investment at a higher price than you paid, you’ll have to add 50% of the capital gains to your income
- Capital gains tax rates are dependent on the province in which you live since provincial tax brackets vary
- There are several capital gains tax exemptions to be aware of, including those on your principal residence
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What is a capital gain in Canada?
A capital gain occurs when you sell, or are considered to have sold, a capital property for more than the total of its adjusted cost base and the expenses incurred in selling the property. Some common types of capital property are: cottages; land, buildings and equipment used in a business or rental operation; and securities such as stocks, bonds and units of a mutual fund trust. Capital property doesn’t, however, include the trading assets of a business, such as inventory. nesto’s capital gains tax calculator will help you determine the amount of capital gains tax you’ll have to pay based on your tax bracket and the province in which you live.
Capital gains tax in Canada
In Canada, 50% of the value of any capital gains is taxable. In other words, if you sell an investment at a higher price than you paid (realized capital gains), you’ll have to add 50% of the capital gains to your income. You’re then taxed based on your particular province’s tax bracket. (See: Capital gains tax rates by province below.)
Here’s how to calculate capital gains in Canada
Capital gains tax is calculated as follows:
Proceeds of disposition – (Adjusted cost base + Expenses on disposition) = Capital gains.
And since 50% of the value of any capital gains is taxable, you must then multiply the capital gains by 50% to determine the amount to add to your income tax and benefit return.
Important: It’s always wise to speak with your accountant before filing your taxes, but particularly in a year when you’ve realized capital gains.
Adjusted cost base (ACB)
The adjusted cost base for real estate is the cost of a property plus any expenses to acquire it, such as commissions and legal fees. The cost of a capital property is its actual or deemed cost, depending on the type of property and how you acquired it. It also includes capital expenditures, such as the cost of additions and improvements to the property. You can’t add current expenses, such as maintenance and repair costs, to the cost base of a property.
Proceeds of disposition
The proceeds of disposition is the amount you received, or will receive, for your property. In most cases, this refers to the sale price of the property. This could also include compensation you received for property that has been destroyed, expropriated or stolen.
Canada capital gains inclusion rate
The capital gains inclusion rate is 50% in Canada, which means that you have to include 50% of your capital gains as income on your tax return.
Capital gains tax on sale of property
In Canada, 50% of the value of any capital gains, including property, is taxable. This means that, if you sell an investment property at a higher price than you paid (realized capital gains), you’ll have to add 50% of the capital gains to your income.
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Capital gains tax exemptions
Lifetime capital gains exemption (LCGE)
Also commonly known as the capital gains deduction, Canadian residents have a cumulative LCGE when they dispose of eligible properties. The capital properties eligible for the LCGE include qualified small business corporation shares and qualified farm or fishing property. The lifetime limit refers to the total amount of LCGE you can claim throughout your lifetime.
Last updated in 2019, the lifetime capital gains exemption for qualified small business corporation shares is $866,912 and the lifetime capital gains exemption for qualified farm or fishing property is $1,000,000
Principal residence exemption
When you sell a property, you may be exempt from paying capital gains tax if the property was your principal residence.
You’re only allowed to have one principal residence at a time and, if you have a spouse, there can only be one principal residence between you. You’ll still have to report the sale of the property on your taxes.
If there was a period during your time of ownership where the property was not your principal residence, then you won’t be eligible to receive the full amount of tax exemption. In this case, the exemption will be calculated based on the number of years that you held the property as your principal residence
Exemptions on capital gains tax for donations
If you donate certain assets to a registered charity or other qualified organization, you may be exempt from paying capital gains tax on any capital gains realized from these gifts.
The types of assets that are eligible for the exemption when donated include: Shares of stock in a mutual fund corporation or a unit of mutual fund trust; Shares, debt obligation or right listed on the stock exchange; Interest in a segregated fund trust; and Ecologically sensitive land.
Qualified donees in Canada include: Registered charities; Registered amateur athletic associations; Registered municipalities; and Registered national arts service organizations.
You’ll still have to report any capital gains and losses of these gifts on the capital gains tax form and you’re required to fill out a separate form – Capital Gains on Gifts of Certain Capital Property – to receive the exemption
Capital gains on gifted property
You may transfer capital property to your spouse if they’re in a lower income tax bracket to save on capital gains tax as a family.
Depending on the type of property, ownership will be transferred to your spouse at either the adjusted cost base (ACB) or the undepreciated capital cost (UCC). After the transfer, you won’t incur capital gains tax but, when your spouse sells the capital property, they’ll pay capital gains tax.
If the capital property you transferred to your spouse is eligible for the lifetime capital gains exemption (LCGE), your spouse can use their remaining LCGE limit when selling the capital property to reduce their capital gains tax. Eligible properties for the LCGE include qualified small business corporation shares and qualified farm or fishing properties.
Capital gains tax rates by province
Capital gains tax rates are dependent on the province in which you live since provincial tax brackets vary. Specifics are laid out in the provincial charts below.
Capital gains tax rates in Ontario
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $13,229 | 0.00% |
| $13,230 | $15,714 | 7.50% |
| $15,714 | $20,644 | 12.55% |
| $20,645 | $44,740 | 10.03% |
| $44,741 | $48,535 | 12.08% |
| $48,536 | $78,786 | 14.83% |
| $78,787 | $89,482 | 15.74% |
| $89,483 | $92,827 | 16.95% |
| $92,828 | $97,069 | 18.95% |
| $97,070 | $150,000 | 21.70% |
| $150,001 | $150,473 | 22.48% |
| $150,474 | $214,368 | 24.09% |
| $214,369 | $220,000 | 25.98% |
| $220,001 | Infinity | 26.76% |
Capital gains tax rates in British Columbia
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $13,229 | 0.00% |
| $13,230 | $20,698 | 7.50% |
| $20,699 | $34,556 | 11.81% |
| $34,557 | $41,725 | 10.03% |
| $41,726 | $48,535 | 11.35% |
| $48,536 | $83,451 | 14.10% |
| $83,452 | $95,812 | 15.50% |
| $95,813 | $97,069 | 16.40% |
| $97,070 | $116,344 | 19.15% |
| $116,345 | $150,473 | 20.35% |
| $150,474 | $157,748 | 21.96% |
| $157,749 | $214,368 | 23.01% |
| $214,369 | $220,000 | 24.90% |
| $220,001 | Infinity | 26.75% |
Capital gains tax rates in Alberta
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $13,229 | 0.00% |
| $13,230 | $19,369 | 7.50% |
| $19,370 | $48,535 | 12.50% |
| $48,536 | $97,069 | 15.25% |
| $97,070 | $131,220 | 18.00% |
| $131,221 | $150,473 | 19.00% |
| $150,474 | $157,464 | 20.61% |
| $157,465 | $209,952 | 21.11% |
| $209,953 | $214,368 | 21.61% |
| $214,369 | $314,928 | 23.50% |
| $314,929 | Infinity | 24.00% |
Capital gains tax rates in Manitoba
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $9,838 | 0.00% |
| $9,839 | $13,229 | 5.40% |
| $13,230 | $33,389 | 12.90% |
| $33,390 | $48,535 | 13.88% |
| $48,536 | $72,164 | 16.63% |
| $72,165 | $97,069 | 18.95% |
| $97,070 | $150,473 | 21.70% |
| $150,474 | $214,368 | 23.31% |
| $214,369 | Infinity | 25.20% |
Capital gains tax rates in Saskatchewan
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $13,229 | 0.00% |
| $13,230 | $16,065 | 7.50% |
| $16,066 | $45,225 | 12.75% |
| $45,226 | $48,535 | 13.75% |
| $48,536 | $97,069 | 16.50% |
| $97,070 | $129,214 | 19.25% |
| $129,215 | $150,473 | 20.25% |
| $150,474 | $214,368 | 21.86% |
| $214,369 | Infinity | 23.75% |
Capital gains tax rates in New Brunswick
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $13,229 | 0.00% |
| $13,230 | $17,463 | 7.50% |
| $17,464 | $40,063 | 13.84% |
| $40,064 | $43,401 | 12.34% |
| $43,402 | $48,535 | 14.91% |
| $48,536 | $86,803 | 17.66% |
| $86,804 | $97,069 | 18.51% |
| $97,070 | $141,122 | 21.26% |
| $141,123 | $150,473 | 21.92% |
| $150,474 | $160,776 | 23.53% |
| $160,777 | $214,368 | 24.76% |
| $214,369 | Infinity | 26.65% |
Capital gains tax rates in Newfoundland & Labrador
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $13,229 | 0.00% |
| $13,230 | $19,372 | 7.50% |
| $19,373 | $20,537 | 11.85% |
| $20,538 | $25,906 | 19.85% |
| $25,907 | $37,929 | 11.85% |
| $37,930 | $48,535 | 14.75% |
| $48,536 | $75,858 | 17.50% |
| $75,859 | $97,069 | 18.15% |
| $97,070 | $135,432 | 20.90% |
| $135,433 | $150,473 | 21.65% |
| $150,474 | $189,604 | 23.26% |
| $189,605 | $214,368 | 23.76% |
| $214,369 | Infinity | 25.65% |
Capital gains tax rates in Nova Scotia
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $11,894 | 0.00% |
| $11,895 | $13,229 | 4.40% |
| $13,230 | $15,000 | 11.90% |
| $15,001 | $21,000 | 14.40% |
| $21,001 | $29,590 | 11.90% |
| $29,591 | $48,535 | 14.98% |
| $48,536 | $59,180 | 17.73% |
| $59,181 | $93,000 | 18.59% |
| $93,001 | $97,069 | 19.00% |
| $97,070 | $150,000 | 21.75% |
| $150,001 | $150,473 | 23.50% |
| $150,474 | $214,368 | 25.11% |
| $214,369 | Infinity | 27.00% |
Capital gains tax rates in Prince Edward Island
| Lower Limit | Upper Limit | Capital Gains Tax Rate |
|---|---|---|
| $0 | $13,229 | 0.00% |
| $13,230 | $13,571 | 7.50% |
| $13,572 | $18,000 | 12.40% |
| $18,001 | $25,000 | 14.90% |
| $25,001 | $31,984 | 12.40% |
| $31,985 | $48,535 | 14.40% |
| $48,536 | $63,969 | 17.15% |
| $63,970 | $97,069 | 18.60% |
| $97,070 | $99,488 | 21.35% |
| $99,489 | $150,473 | 22.19% |
| $150,474 | $214,368 | 23.79% |
| $214,369 | Infinity | 25.69% |
Reporting capital losses to offset capital gains
If your assets sold for less than the total cost you spent on them, you can offset your capital gains with the capital losses to reduce the amount of capital gains tax you have to pay. If you have more capital losses than capital gains in any given tax year, you can carry the net capital loss to the capital gains of the last three years or forward to offset any capital gains in future years. Capital losses can’t be claimed for personal-use properties – ie, your principal residence – as this is considered a personal expense.
Tip: In the year you buy a depreciable property, such as a building, you can’t deduct its full cost. But, since this type of property wears out or becomes obsolete over time, you can deduct its capital cost over a period of several years. This deduction is called a capital cost allowance.
Reporting rules for registered investments
If you have investments in a registered account, you’re not required to pay capital gains tax on them even if they grow in value as they fall under ‘tax-deferred’ or ‘tax-sheltered’ status. Registered accounts in Canada include:
- Registered retirement savings plan (RRSP) – Retirement savings and investments that grow tax-deferred until retirement
- Registered education savings plan (RESP) – Secondary education savings that grow tax-free until withdrawn with a lifetime contribution limit of $50,000. The government also contributes a maximum of $7,200 worth of Canada Education Savings Grant (CESG) funds by providing an additional 20% of your RESP to the plan each year
- Registered disability savings plan (RDSP) – Canadians with disabilities are eligible for additional grants and bonds from the government that grow tax-deferred until withdrawn
- Pooled registered pension plan (PRPP) – Large, pooled pension plan for retirement savings with lower administration costs
- Tax-free savings account (TFSA) – Grants tax-free status to any contributions, income earned or withdrawals associated with the account. There’s an annual limit on contributions. The current annual TFSA limit is $6,000
FAQ
How to figure out my capital gains on my home?
When it comes to capital gains taxes, there’s no one-size-fits-all answer. The amount of tax you’ll owe depends on a number of factors, including the value of your home, the length of time you’ve owned it, and the province or territory in which you live. However, there are a few general principles that can help you calculate your capital gains tax liability. In Canada, capital gains are taxed at a rate of 50%. So, if you sell your home for $500,000, you can expect to owe approximately $250,000 in capital gains tax.
Does capital gains count as income in Canada?
In Canada, capital gains are considered part of your income and are taxed accordingly. This can come as a surprise to some people, who assume that capital gains are somehow different from other forms of income. However, the reality is that capital gains are simply profits from the sale of investments or property. And like any other type of income, they’re subject to tax. So if you’re thinking about selling some investments this year, be sure to factor in the capital gains tax. Otherwise, you could end up paying more than you bargained for.
Can capital gains be split with a spouse?
If you’re married or in a common-law relationship, you may think that you can split your capital gains with your spouse in order to reduce the taxes you owe. Unfortunately, the Canada Revenue Agency has rules in place that prevent this from happening. These rules are known as the attribution rules, and they state that any capital gains that are realized by one spouse can be attributed to the other spouse. As a result, both spouses will be liable for taxes on the full amount of the gain. So if you’re thinking of splitting your capital gains with your spouse, you may want to think again!
How to calculate capital gain formula?
Capital gains tax is calculated as follows:
Proceeds of disposition – (Adjusted cost base + Expenses on disposition) = Capital gains.
And since 50% of the value of any capital gains is taxable, you must then multiply the capital gains by 50% to determine the amount to add to your income tax and benefit return.
Final Thoughts on Capital Gains in Canada
So there you have it. Everything you ever wanted to know about capital gains in Canada, and a handy calculator to boot! Of course, if you still have questions or would like more personalized advice, don’t hesitate to get in touch with one of our mortgage experts today. We would be happy to help make the process as smooth sailing as possible for you. Thanks for reading and happy calculating!
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