Taxes
Canada — Tax: Capital Gains
Canada has no separate capital gains tax rate — instead, 50% of a capital gain is included in taxable income and taxed at the individual's marginal federal and provincial rates. A previously proposed increase to a two-thirds (66.67%) inclusion rate on gains above $250,000, originally slated for 2026, was cancelled on 21 March 2025, so the 50% inclusion rate remains in effect for all individual capital gains in 2026. The Lifetime Capital Gains Exemption (LCGE) on qualifying small-business shares and farming/fishing property remains at $1,250,000.
Key facts
- Capital gains inclusion rate: 50% for individuals — only half the gain is taxable, at marginal rates (no separate CGT rate).
- The proposed 66.67% inclusion rate on gains above $250,000 was cancelled on 21 March 2025 and does not apply in 2026.
- Lifetime Capital Gains Exemption (LCGE): $1,250,000 on qualifying small-business shares and farming/fishing property.
Costs
- Inclusion rate (individuals): 50%
- Lifetime Capital Gains Exemption: $1,250,000
Common mistakes
- Planning around the cancelled two-thirds inclusion rate proposal, which does not apply in 2026.
- Forgetting the LCGE only applies to qualifying small-business shares and farming/fishing property, not general investment gains.