Capital Gains Inclusion Rate in Canada 2026

In 2026, Canada's capital gains inclusion rate changed significantly. For the first time in decades, the inclusion rate increased from 50% to 66.67% (two-thirds) effective June 25, 2024 — but only on gains exceeding $250,000 per year. Gains up to $250,000/year still use the 50% inclusion rate. This two-tier system creates strategic opportunities for tax planning.

How to Calculate Capital Gains Tax

Capital gain = Sale price − Adjusted cost base (ACB). Only 50% (or 67%) of this gain is added to your income and taxed at your marginal rate. Example: You buy a stock for $10,000 (ACB), sell it for $15,000. Your capital gain is $5,000. Only $2,500 (50%) or $3,333 (67%) is taxable. If your marginal rate is 45%, you owe $1,125 (at 50% inclusion) or $1,500 (at 67% inclusion).

ACB (Adjusted Cost Base) — Getting It Right

Your ACB is the average cost of every unit you own, including all purchases, reinvested dividends, and fees. Many investors wrongly use just the most recent purchase price. CRA requires ACB to be calculated on an average-cost basis. Brokers provide ACB on trade confirmations; track it carefully across all accounts. Common mistake: calculating separate ACBs for different purchases instead of averaging all units.

Principal Residence Exemption (PRE)

Your principal residence (home) is typically fully exempt from capital gains tax. You can designate one property as your principal residence for each year you owned it. If you own multiple properties, only one can be designated per year. Cottage or rental property gains do not qualify. To claim PRE, file a Form T776 or T777 with your tax return.

Capital Loss Carryback and Carryforward

Capital losses offset capital gains in the same year, first. Unused losses carry forward indefinitely to future years. Losses can also carry back 3 years to offset gains in prior years (useful after a major market downturn). However, losses cannot offset other income—only gains. This is why tax-loss harvesting (selling losing positions to offset gains) is a popular year-end strategy.

Superficial Loss Rule and Cryptocurrency

The superficial loss rule prevents you from claiming a loss if you repurchase the same security within 30 days (before or after the sale). Crypto is treated as capital property, so gains and losses follow the same rules as stocks. Reporting crypto gains to CRA is mandatory, even if you didn't receive a T5008 slip. Many Canadian investors underreport crypto gains—CRA is actively auditing this.