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 or the current year's T1 General instructions, as the applicable rate may differ based on the amount of your gain and who is realizing it (individual vs. corporation vs. trust).

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 (or two-thirds, depending on the applicable year) of allowable capital losses can be used only against taxable capital gains, not other income.