Canada Capital Gains Tax Calculator 2026

How capital gains tax works in Canada

Canada has no separate capital gains tax: 50% of your net capital gain for the year becomes a "taxable capital gain" on line 12700 of your T1 return, and it is taxed at your ordinary federal and provincial rates on top of your other income. You work out the gain on Schedule 3, Capital Gains (or Losses).

Because the taxable half is stacked on top of your salary, pension or business income, the same gain costs very different amounts depending on your income and province. In Ontario, a $20,000 gain adds $2,555 of tax for someone earning $40,000 (12.8% of the gain), but $2,991 at a $90,000 salary (15.0%). The table below runs the same $20,000 gain through the calculator's 2026 engine at three income levels.

Adjusted cost base (ACB): getting the starting number right

Your capital gain is the proceeds of disposition minus the adjusted cost base (ACB) minus your selling costs, such as commissions and legal fees. The ACB is what you paid, plus acquisition costs, plus later adjustments such as reinvested distributions or a superficial loss added back.

When you buy the same security more than once, the CRA's Guide T4037 says you must average the cost of identical properties each time you buy. Selling some of the shares does not change the average cost per share of the ones you keep. Worked example: you buy 100 shares at $20 with a $10 commission, then 50 more at $32 with another $10 commission. Your total ACB is $3,620 for 150 shares, or $24.13 per share. If you later sell 80 shares at $35 ($10 commission), the gain is $2,800 − $1,931 − $10 = $859. If you used only your first purchase price you would report $1,190, which overstates the gain by $331.

Stock splits change the per-share ACB but not the total: T4037 uses 100 shares bought for $1,000 ($10 each) that split 2-for-1 into 200 shares at $5 each. T4037 tells you to report share and fund sales from your T5008 slip or account statement, but the gain is yours to calculate, so keep your own running ACB record for each holding rather than relying on the broker.

The superficial loss rule (30 days before or after)

You cannot claim a capital loss if you, or a person affiliated with you, buy the same or identical property in the period from 30 calendar days before the sale to 30 calendar days after it, and still own it on the 30th day after the sale. Your spouse or common-law partner and a corporation controlled by either of you are affiliated persons.

The loss is not lost forever. When you are the person who bought the substituted property, the denied loss is usually added to that property's ACB, so you get the benefit when you eventually sell it. The rule catches common year-end "tax-loss selling" where an investor sells a losing stock in December and buys it back a week later, or where a spouse buys the same shares in their own account.

Capital gains on a primary residence

Selling the home you live in is usually tax-free under the principal residence exemption, but since the 2016 tax year you must still report the sale. According to the CRA, you complete Schedule 3 and Form T2091(IND), Designation of a Property as a Principal Residence by an Individual, for the year of sale; a penalty may apply if you designate late.

To qualify for a given year, the property must be a housing unit you own alone or jointly that you, your spouse or common-law partner, or your child ordinarily inhabited during that year. Since 1982 a family unit can designate only one home per year, so a couple with a house and a cottage has to choose which property shelters which years. The formula includes a "plus one" year, which lets you cover both the old and the new home in the year you move.

Short-term sales are treated differently. Under the residential property flipping rule, a housing unit sold on or after January 1, 2023 that you owned for less than 365 consecutive days is deemed business income: fully taxable, with no 50% inclusion and no principal residence exemption. The CRA lists exceptions for life events, including death, a new household member, a relationship breakdown, a threat to personal safety, serious illness or disability, an involuntary job loss, an eligible work or study relocation, insolvency, and destruction or expropriation of the home.

What happened to the two-thirds inclusion rate?

The increase never took effect. Budget 2024 proposed raising the inclusion rate from one-half to two-thirds on an individual's annual gains above $250,000 (and on all gains of corporations and most trusts). In January 2025 Finance Canada deferred the start to January 1, 2026, and Finance Canada's 2026 Report on Federal Tax Expenditures confirms that "the government confirmed in Budget 2025 that it would not proceed" with the change, nor with the Canadian Entrepreneurs' Incentive that came with it.

For 2026 the inclusion rate is 50% on every dollar of gain, the same as the 50% used on 2025 returns. There is no higher rate on large gains to plan around. Spreading a gain can still lower tax when it keeps the taxable half out of a higher bracket: two $10,000 gains realized in different tax years, in Ontario at a $90,000 salary, cost $1,483 each, against $2,991 for one $20,000 gain.

Lifetime capital gains exemption (LCGE)

The LCGE lets individuals who sell qualified small business corporation shares or qualified farm or fishing property shelter a large gain completely. T4037 states that for 2025 the LCGE is $1,250,000, so the maximum capital gains deduction is $625,000 (half of $1,250,000), claimed on line 25400 after completing Form T657.

You do not have to claim the full amount in one year. A cumulative net investment loss (CNIL), which builds up when investment expenses exceed investment income, reduces what you can claim, so anyone with investment income or expenses since 1988 must also complete Form T936. The shares must also meet the holding-period and asset tests in T4037.

Capital losses, personal-use property and crypto-assets

A net capital loss can only reduce taxable capital gains, not salary. You can carry it back to any of the three previous years or forward indefinitely; T4037 says to complete Schedule 3 so the CRA keeps an up-to-date record of the loss.

• Personal-use property (a car, boat or furniture): if the ACB or proceeds are under $1,000, each is treated as $1,000, and losses are not deductible.
• Listed personal property (art, jewellery, rare books, stamps, coins): losses can only offset gains on other listed personal property.
• Crypto-assets: first decide whether you are trading as a business or holding on account of capital; capital disposals go on line 7 of Schedule 3, business profits are fully taxable as business income.