How the gain is calculated
Three amounts drive the calculation: the proceeds of disposition, the adjusted cost base (usually what you paid, adjusted for certain later events) and the outlays and expenses of the sale, such as commissions or legal fees. You subtract the cost base and the outlays from the proceeds. If the result is positive, you have a capital gain.
A disposition is wider than a sale. The CRA also treats events such as gifting property other than cash, exchanging one property for another, or a change in the property’s use as a deemed sale in some circumstances. The gain is reported for the calendar year of the disposition, even when a business has a different fiscal year-end.
The inclusion rate and an illustrative example
The inclusion rate decides what share of a gain is taxable. It is one-half. The increase to two-thirds that had been proposed was later cancelled, so a taxable capital gain is generally half of the gain. The taxable amount is added to your other income and taxed at your marginal rates.
As an illustration, suppose you sell shares for $20,000. They cost $12,000, and you pay $200 in commissions. The gain is $20,000 less $12,200, or $7,800. With a one-half inclusion rate, the taxable capital gain is $3,900. These figures are illustrative only and ignore any exemptions, reserves or deductions that might apply.
Capital losses
If you sell for less than the cost base plus outlays, you have a capital loss. Half of it is an allowable capital loss, and generally it can be used only against taxable capital gains, not against salary or business income. If losses exceed gains in the year, the excess is a net capital loss.
A net capital loss can generally be carried back to any of the three previous years or forward to any future year. Carrying it back is done on Form T1A, and Schedule 3 should be filed so the CRA’s records are updated. A loss on your home cannot be claimed, because it is personal-use property, and special rules apply to some other losses, so check before assuming a loss is usable.
Records and what to discuss with your accountant
Keep purchase confirmations, statements showing commissions, and the fair market value on the date you inherited property, received it as a gift or changed its use. You do not send these with your return, but you need them if the CRA asks.
You must file a return to report a disposition of capital property, even when no tax is payable. Ask your accountant whether the sale qualifies for an exemption, such as the principal residence exemption, whether a reserve is available, and whether the gain could be treated as business income instead of a capital gain.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Calculating and reporting your capital gains and lossesCanada Revenue Agency
- Capital lossesCanada Revenue Agency
- What’s new for corporationsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.