Canadian Capital Gains: Understanding the Tax Implications
Only 50% of Capital Gains Taxable
In Canada, only 50% of the capital gains realized on investments or asset sales are subject to taxation. This means that if you sell an investment or asset for a profit, only half of that profit is taxed. The remaining 50% is considered tax-free.
Example for Tax Years 2025-2028
Let's consider an example to illustrate this concept. Assume that an individual named Mio has no other capital gains or stock options during the tax years 2025 through 2028. If Mio sells a stock for a capital gain of $10,000, the following applies:
- Taxable capital gain: 50% of $10,000 = $5,000
- Tax-free capital gain: 50% of $10,000 = $5,000
In this example, Mio would only be required to pay taxes on the taxable capital gain of $5,000.
Types of Assets Subject to Capital Gains Tax
In Canada, capital gains or losses are realized only when assets are sold or disposed of. This includes assets such as stocks, bonds, precious metals, real estate, and certain collectibles.
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