The Capital Gains Inclusion Rate Change, Explained
Traduction en cours — le texte ci-dessous est temporairement en anglais.
Between 2024 and 2025, Ottawa proposed, delayed, and then cancelled a plan to raise how much of your capital gains get taxed. If you own investments outside a TFSA or RRSP, or you're thinking about selling a cottage or rental property, it's worth understanding exactly what was on the table, what happened to it, and where the rules stand now.
What the inclusion rate actually does
The capital gains inclusion rate is the percentage of a capital gain that gets added to your taxable income. It is not a separate tax rate on the gain itself — it just determines how much of the gain counts as income before your regular marginal tax rate applies.
For decades the standard inclusion rate has been one-half, or 50%. So if you sell shares outside a registered account and realize a $10,000 gain, $5,000 is added to your taxable income for the year and taxed at whatever bracket that pushes you into. The other half is never taxed at all.
- Capital gain: the profit from selling capital property like stocks, ETFs, a second property, or a business interest - Inclusion rate: the fraction of that gain treated as taxable income - Only the included portion is taxed, at your ordinary marginal rate — there's no separate 'capital gains tax rate' in Canada
À lire aussi : TFSA Growth Calculator · RRSP Growth Calculator. Pour les règles officielles, consultez Canada Revenue Agency.
The 2024 proposal
In its April 2024 budget, the federal government proposed raising the inclusion rate from one-half to two-thirds. For corporations and most trusts, the higher rate would have applied to all capital gains. For individuals, it was proposed to apply only to the portion of annual capital gains above a $250,000 threshold, with gains below that line staying at the 50% rate.
The change was legislated to take effect for gains realized on or after June 25, 2024, and it triggered a wave of asset sales that spring and summer as investors, business owners, and some cottage owners tried to lock in the lower rate before the deadline.
Delay, then cancellation
Implementation was later pushed back, and the effective date was moved to January 1, 2026 rather than mid-2024, giving the CRA and taxpayers more time to prepare for forms and reporting changes that hadn't yet been finalized.
In March 2025, the federal government announced it would not proceed with the increase at all. The inclusion rate stayed at 50% for individuals, corporations, and trusts, and the proposed $250,000 individual threshold never took effect. Anyone who sold assets in 2024 specifically to beat a rate hike ended up paying tax on a gain that, in hindsight, would have been taxed the same way regardless.
What this means for you today
As of this writing, the capital gains inclusion rate is 50% across the board, with no annual threshold that pushes it higher. That's the number to use for any rough tax planning on non-registered investments, rental properties, or a business sale — but confirm the current rate directly with the CRA before making a major financial decision, since tax rules can change again in a future budget.
This whole episode only touches money outside registered accounts. Gains inside a TFSA, RRSP, RRIF, or FHSA are unaffected — TFSA gains are never taxed, and RRSP/FHSA gains are taxed as ordinary income on withdrawal, not as capital gains. The sale of your principal residence also remains generally exempt from capital gains tax under the principal residence exemption, separate from this inclusion-rate debate.
If you hold investments in a non-registered account or you're planning to sell an asset with a large unrealized gain, the practical lesson is less about the specific rate and more about the process: check the current rules before you act, and don't make an irreversible sale based on a proposed change that hasn't been finalized. The 2024 rush to sell ahead of a deadline that was later cancelled is a good reminder of how costly it can be to react to proposed tax law rather than enacted tax law.
Questions fréquentes
Does the capital gains inclusion rate affect my TFSA or RRSP?
No. The inclusion rate only applies to capital gains realized in non-registered (taxable) accounts. Gains inside a TFSA are never taxed, and gains inside an RRSP or FHSA are deferred until withdrawal and taxed as ordinary income at that point, not as a capital gain. This entire debate is irrelevant to money held in registered accounts.
Do I still owe tax when I sell an investment for a profit?
Yes. Selling stocks, mutual funds, ETFs, a rental property, or other capital property for more than you paid still triggers a capital gain, and half of that gain is added to your taxable income at your marginal rate. Nothing about the 2024-2025 back-and-forth changed that basic rule.
Is there still a risk this could change again?
Tax policy can always be revisited in a future federal budget, so treat the current 50% rate as the state of play today, not a permanent guarantee. Before you sell a large asset or file a return involving significant capital gains, confirm the inclusion rate and any thresholds directly with the CRA or a tax professional.
Sources
Information générale destinée aux lecteurs canadiens; ne constitue pas un conseil financier, fiscal ou de placement personnalisé. Les chiffres reflètent la date de révision; confirmez les limites et règles en vigueur auprès de l'ARC ou d'un professionnel qualifié avant d'agir.