How much of a capital gain is taxable in Canada and has that rate changed recently?

Capital gains in Canada are taxed on an "inclusion rate" — only a portion of the gain is added to income and taxed at your marginal rate; the rest is tax-free. For many years the inclusion rate was one-half (50%), meaning half of your capital gain was taxable income.

Recent federal budget announcements proposed increasing the inclusion rate to two-thirds (66.67%) for gains above an annual threshold. Because tax law in Canada can change and proposals require legislation to take effect, always confirm the current inclusion rate for the tax year you are filing. Check CRA's website for the latest word — but as things stand, that proposed increase never took effect: the federal government cancelled it in March 2025, and the inclusion rate remains a flat 50% for individuals, corporations, and trusts, regardless of the size of the gain.

Gains on your principal residence are sheltered by the principal residence exemption and are not subject to the inclusion rate. Losses can be applied against capital gains in the same year, carried back three years, or carried forward indefinitely. Half of allowable capital losses can be used only against taxable capital gains, not other income.