How capital gains are taxed in Canada
Capital gains in Canada are taxed by including a portion in your income, then applying your marginal rate to that portion. For most individuals, 50% of the gain is included for the first $250,000 of net gains in a year. Anything above $250,000 is included at 66.67% (the rule introduced in Budget 2024). Capital gains inside a TFSA, RRSP, FHSA, or RESP are not taxed at all. Capital losses can offset gains in the same year, carried back three years, or carried forward indefinitely.
You sell stock outside a registered account with a $100,000 gain. Half ($50,000) is included in your income. At a 43% marginal rate in Ontario, the tax owed is about $21,500, so an effective rate of 21.5% on the gain. The exact same $100,000 of gain inside your TFSA: $0 tax. This is why putting your highest-growth assets inside registered accounts matters more than picking individual stocks.
Selling a stock in late December to buy it back two days later, hoping to crystallize a loss. The CRA’s superficial loss rule denies losses if you (or affiliated persons) repurchase the same security within 30 days. Wait 31 days or buy a similar but not identical ETF.
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