What kinds of assets count as capital property for tax purposes?

Capital property under the federal Income Tax Act is broadly defined as any asset you hold to generate income or to appreciate in value, rather than to resell in the ordinary course of a business. Common examples include shares in corporations, mutual funds, ETFs, rental properties, vacation properties, raw land held as an investment, rights and options over property, and interests in partnerships.

Assets you use personally — such as a car or furniture — are generally "listed personal property" or personal-use property. Gains on personal-use property are taxable but losses are generally not deductible, with some exceptions for certain listed personal property like art or jewellery.

Business inventory is specifically excluded from capital property treatment; profits on inventory are fully taxable as business income, not capital gains. The characterization of an asset as capital property versus inventory is a facts-based determination and is one of the most frequently disputed issues with the Canada Revenue Agency. If you regularly buy and sell a type of asset, the CRA may argue you are in the business of trading it, making all gains fully taxable.