What is the new 66.7% capital gains rule in Canada?

For individuals, annual capital gains up to $250,000 remain taxed at the 50% inclusion rate. Any portion of net capital gains exceeding $250,000 is subject to a 66.67% (two-thirds) inclusion rate. For corporations and trusts, 66.67% of all capital gains are taxable from dollar one.

How is the sale of a primary residence taxed in Canada?

Under the Principal Residence Exemption (PRE), 100% of the capital gains realized from selling your eligible primary home are tax-free. You must report the disposition on Schedule 3 and Form T2091 of your personal tax return.

How do capital losses offset capital gains in Canada?

Net capital losses can be used to directly offset taxable capital gains in the current tax year. Any remaining allowable capital losses can be carried back up to 3 calendar years or carried forward indefinitely to offset future gains.

Updated for 2024/2025 66.7% Federal Rules

Canada Capital Gains Tax Calculator

Accurately compute taxes on real estate, stocks, crypto, and cottages under the 50% vs. 66.7% inclusion rate rules ($250,000 threshold).

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📈 Capital Asset Disposition

CRA Schedule 3

Taxpayer Entity Type

Asset Category

Selling Price / Proceeds ($)

Adjusted Cost Base (ACB) ($)

Original purchase price + capital improvements

Outlays & Selling Expenses ($ CAD) Realtor commissions, legal fees

Taxpayer Annual Income & Location Marginal Bracket Calculator

Regular Annual Income ($ CAD)

Province of Residence

Capital Gains Tax Owed 22.4% Effective

$71,280

Net Cash Proceeds Kept: $246,220

Total Capital Gain $317,500

Taxable Capital Gain $170,000

Inclusion Rate Tier Breakdown CRA $250k Rule

Tier 1: Gains Up to $250,000 (50% Rate) $125,000 Taxable

50% inclusion on $250,000 portion

Tier 2: Gains Above $250,000 (66.7% Rate) $45,000 Taxable

66.67% inclusion on $67,500 portion

Gross Proceeds: $650,000

Less: Adjusted Cost Base (ACB): -$300,000

Less: Selling Expenses: -$32,500

Net Total Capital Gain: $317,500

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Understanding Canada's 2024/2025 Capital Gains Inclusion Rule

In the 2024 Federal Budget, Canada introduced substantial structural reforms to capital gains taxation to increase revenue and target high-wealth transactions.

1. The Two-Tiered Individual Inclusion Rate ($250,000 Threshold)

Prior to June 25, 2024, only 50% of any capital gain was added to taxable income. Under the new statutory rules:

The first $250,000 in net capital gains realized by an individual per calendar year remains subject to the historical 50% inclusion rate.
Every dollar of net capital gain exceeding $250,000 is subject to an escalated 66.67% (two-thirds) inclusion rate.

2. Corporations & Trusts Pay 66.7% From Dollar One

Corporations, holding companies, and trusts do not receive the $250,000 threshold. All capital gains (100% of the gain) are subject to the flat 66.67% inclusion rate, increasing the tax drag on corporate investment portfolios.

Frequently Asked Questions (Capital Gains)

How does the Lifetime Capital Gains Exemption (LCGE) work? ▼

Canadian entrepreneurs who sell Qualified Small Business Corporation (QSBC) shares or farm/fishing property benefit from the LCGE, indexed up to $1,250,000 in 2025. This allows qualifying business owners to shelter up to $1.25M in capital gains completely tax-free.

Can capital losses be used to offset regular employment income? ▼

No. In Canada, allowable capital losses can only offset taxable capital gains; they cannot be used to reduce employment salary or business income (except in the year of death). Unused capital losses can be carried back 3 years or forward indefinitely.

FreeCalcSuite • Official Canadian Capital Gains Statement