Capital Gains Tax in Canada: What Investors Pay in 2026
You sell a stock in a taxable account for more than you paid. The tax bill that follows is usually smaller than people brace for, because capital gains tax in Canada does not apply to the whole profit. Only half of a capital gain is taxable. The other half is yours, untouched, and it never appears on your return as income.
That single rule is worth understanding properly. It changes how a dollar of investment profit compares with a dollar of salary, and the rules sitting around it can hand you back real money or quietly deny you a deduction.
What you will learn on this page:
- How a capital gain is calculated, including the costs you can subtract
- What a real gain costs in dollars, using the CRA’s own example
- Why the inclusion rate is still 50% in 2026
- How capital losses work, and the 30-day rule that can void a loss claim
- Where capital gains tax does not reach at all
All figures on this page are data as of August 31, 2026.
How a capital gain is calculated
A capital gain is not simply your sale price minus your purchase price. According to the CRA’s guide to calculating and reporting your capital gains and losses, the gain is your proceeds of disposition minus the sum of two things: your adjusted cost base (ACB) and the outlays and expenses of making the sale, such as commissions.
The commission matters. It is not a rounding error to ignore, it is a subtraction the CRA explicitly allows, and it lowers the gain you report.
From there the inclusion rate does the work. Fifty percent of the capital gain is taxable. The CRA’s own example puts it this way: “Fifty percent of the capital gain would be taxable and you would report $1,220 as your taxable capital gain on line 12700”.
Mechanically, the calculation lives on Schedule 3. Line 19900 of Schedule 3 flows through to line 12700 of your return when the figure is positive. If it is negative, you have a net capital loss instead, and it does not go on line 12700 at all. That distinction matters, and we come back to it below.
Getting the ACB right is the step most likely to trip investors up, especially when shares were bought in tranches over time. Our walkthrough on calculating your adjusted cost base correctly for the CRA uses crypto as the worked case, but the mechanics are the same idea for shares.
The CRA’s worked example, turned into dollars
The CRA’s own example is a clean one. An investor sells 400 shares for $6,500, pays a $60 commission on the sale, and has an ACB of $4,000.
| Step | Amount |
|---|---|
| Proceeds of disposition | $6,500 |
| Less adjusted cost base | $4,000 |
| Less outlays and expenses (commission) | $60 |
| Capital gain | $2,440 |
| Taxable capital gain (50%) | $1,220 |
So $2,440 of profit produces $1,220 of taxable income. But taxable income is not tax. What you actually pay depends on your marginal rate, so here is that same gain run through an ordinary situation.
Take an Ontario resident with $80,000 of taxable income. That sits inside the federal second bracket for 2026, which runs from $58,523.01 to $117,045 and is taxed at 20.5%, and inside the Ontario second bracket, which runs from $53,891.01 to $107,785 and is taxed at 9.15%. Both come from the CRA’s current-year tax rates and brackets. Together that is a combined listed marginal rate of 29.65%.
| The same $2,440, two ways | Capital gain | Salary |
|---|---|---|
| Amount received | $2,440 | $2,440 |
| Amount that is taxable | $1,220 | $2,440 |
| Tax at 29.65% | $361.73 | $723.46 |
| Effective rate on the full amount | 14.825% | 29.65% |
The identical $2,440 costs $361.73 in tax as a capital gain and $723.46 as employment income. The effective rate on the full gain, 14.825%, is exactly half the marginal rate.
Two caveats. The provincial side uses Ontario’s listed bracket rate only, and your actual bill also depends on provincial credits and surtaxes, so treat 29.65% as an illustration rather than a quote for your own return. If you would rather work with a figure carrying no provincial assumptions, the federal-only version is $1,220 at 20.5%, which is $250.10, against $500.20 if the same $2,440 had been salary.
Quebec residents should note that Quebec administers its own income tax, so a Quebec return is calculated differently. We have used no Quebec figures here.
Why the rate is still 50% in 2026
There is a good reason investors are unsure about this one. A 2024 federal proposal would have raised the inclusion rate to two-thirds on gains above $250,000 a year for individuals, a change the Department of Finance deferred to January 1, 2026 before it was cancelled outright on March 21, 2025. The wording in the government’s March 21, 2025 news release is direct: “Today, Prime Minister Carney announced that the Government of Canada will cancel the proposed hike in the capital gains inclusion rate.”
For 2026 the practical result is simple. The inclusion rate remains 50%, and nothing above any threshold is treated differently for an individual investor.
The same release confirmed the government “will maintain the increase in the Lifetime Capital Gains Exemption limit to $1,250,000 on the sale of small business shares and farming and fishing property.” That figure gets quoted widely enough to be worth saying plainly: the Lifetime Capital Gains Exemption does not apply to publicly traded stocks. If your gain came from selling shares of a company on an exchange, the LCGE is not available to you.
Losses: the part that gives money back
Capital losses are not a consolation prize. They are a tax asset, and the ordering rules are generous.
A capital loss first reduces your capital gains in the same year, down to a balance of zero. Anything left over becomes a net capital loss, and here the CRA’s page on capital losses is worth reading in full. Its wording: “Generally, you can apply your net capital losses to taxable capital gains of the three preceding years and to any future years.”
Back three years. Forward indefinitely. A loss you cannot use today is not wasted, it waits.
The 30-day rule
The trap is the superficial loss rule, and it catches people who sell purely for the tax benefit and then buy straight back in. Two conditions have to be met for a loss to be denied:
1. You, or a person affiliated with you, buy or have a right to buy the same or identical property in the window that starts 30 calendar days before the sale and ends 30 calendar days after it, and 2. You, or a person affiliated with you, still own or have a right to buy that property 30 calendar days after the sale.
If both are true, the loss is denied. It is usually added to the ACB of the substituted property instead, so the benefit is deferred rather than destroyed, but it is not available on this year’s return.
Affiliated persons include your spouse or common-law partner and corporations you control, so the workaround people reach for first, having a spouse buy the shares back, does not work. Neither does the other common move: selling in a taxable account and repurchasing inside your own TFSA or RRSP within the window trips this kind of denial too. If you intend to claim the loss, leave the full 30 days on either side alone.
Where capital gains tax does not reach
Registered accounts
Gains realized inside a TFSA are not taxed, and withdrawals are tax-free. Gains inside an RRSP are not taxed as capital gains either, though RRSP withdrawals are taxed as regular income when they come out.
The takeaway is blunt: inside these accounts the 50% inclusion rate is irrelevant, so fill registered room first. For 2026 the TFSA dollar limit is $7,000 and the RRSP dollar limit is $33,810 (your actual RRSP room is 18% of prior-year earned income capped at that limit, plus carry-forward, minus any pension adjustments). Our breakdown of the 2026 TFSA and RRSP contribution limits has the detail, and if you are deciding which account to fill first, our FHSA vs TFSA vs RRSP comparison is the better starting point. For what to actually hold in the tax-free account, see our TFSA stocks coverage.
Two things to keep in view for accuracy. Losses inside a TFSA or RRSP can never be claimed, and US dividend withholding differs by account type.
Donating listed securities
Donating listed securities to a qualified donee carries an inclusion rate of zero on the gain. That treatment applies to shares, debt and rights listed on a designated stock exchange, to mutual fund shares and units, and to segregated fund interests.
The frequent trading caveat
One edge case deserves a line, without overstating it. Gains on Canadian securities can land on income account, meaning fully taxed, rather than on capital account. The CRA’s wording: “If you dispose of Canadian securities, it’s possible that you could have a gain or loss on income account (as opposed to the more likely capital gain or loss).”
An election exists to treat all Canadian securities as capital property, but a trader or dealer in securities cannot make it. For an ordinary buy-and-hold investor this is a footnote rather than a threat. If your activity looks more like day trading than investing, it is a conversation to have with an accountant.
FAQ
How much is capital gains tax in Canada? There is no separate capital gains tax rate. Half of your capital gain is added to your taxable income and taxed at your marginal rate. On the CRA’s example gain of $2,440, an Ontario resident with $80,000 of taxable income and a combined listed marginal rate of 29.65% would pay $361.73, an effective rate of 14.825% on the full gain. Provincial credits and surtaxes can change the exact figure.
What is the capital gains inclusion rate for 2026? It is 50%. A proposal to raise it to two-thirds on gains above $250,000 a year for individuals was cancelled on March 21, 2025.
Can I claim a loss if I buy the stock back? Not if you or an affiliated person repurchase it, or hold a right to repurchase it, within 30 calendar days before or after the sale and still hold that position or right 30 days after. The loss is denied under the superficial loss rule and is usually added to the ACB of the substituted property instead. Buying it back inside your own TFSA or RRSP within the window trips the same kind of denial.
Do I pay capital gains tax in a TFSA? No. Gains realized inside a TFSA are not taxed and withdrawals are tax-free. The trade-off is that losses inside a TFSA can never be claimed.
The bottom line
Capital gains are the most lightly taxed way most Canadian investors earn money in a taxable account, and 2026 has not changed that. Half the gain is taxable, the inclusion rate survived the proposed increase intact, commissions come off the top, and losses can be carried back three years or forward indefinitely.
The two rules that cost people real money are the ones with dates attached: the 30 calendar days on either side of a loss sale, and the registered contribution room that goes unused each year. Neither requires a strategy. Both just require knowing the rule before you place the trade.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Tax rules, rates and limits on this page were verified on August 31, 2026 against the Canada Revenue Agency’s published guidance, the Department of Finance’s January 31, 2025 announcement and the government’s March 21, 2025 news release.
