Capital Gains Tax in Canada: Proposed Changes

What's Changing?

The federal government has proposed changes to capital gains taxation, including: * Increasing the inclusion rate for capital gains above $250,000 from 50% to 66.67% for individuals.

Tax Calculation

To calculate your capital gains tax, you first need to determine your taxable capital gains. This is done by subtracting your adjusted cost base (ACB) from the proceeds of disposition. Once you have your taxable capital gains, you add them to your other taxable income for the year.

Current Tax Implications

Currently, only 50% of capital gains are taxable in Canada. This means that if you sell an asset for $100,000 more than you paid for it, you are only taxed on $50,000 of that gain.

Proposed Tax Implications

Under the proposed changes, you would be taxed on 66.67% of the capital gains above $250,000. This means that if you sell an asset for $300,000 more than you paid for it, you would be taxed on $166,666.67 of that gain.

Effective Date

The proposed changes are expected to take effect for dispositions on or after January 1, 2024.