Capital gains tax

What this is

Tax on selling investments at a profit

In Canada, only 50% of a capital gain is taxable (the 'inclusion rate'). That taxable half is added to your other income and taxed at your marginal rate. Most generous form of investment income in Canada — beats interest, beats dividends from foreign stocks, beats RRSP withdrawals.

• ·$100k capital gain → $50k taxable → taxed at your marginal rate.
• ·Inclusion rate is 50% today. A 2024 proposal raised it to 66.7% above $250k/yr but was reversed.
• ·Best account to hold growth stocks: non-registered for the capital-gains tax break, OR TFSA for tax-free, NOT RRSP (RRSP converts capital gains into fully-taxed income on withdrawal).