email: taxes@mallardsnest.ca


Capital Gains Examples

Here are some examples of how much tax you would pay before and after the changes in the capital gains.

The calculations are for a person with regular income of $50,000.

As you can see, even with a net PROFIT of $1,000,000 there is only an extra tax burden of $41,258.25, that’s just over 4%.

Now for a history lesson of capital gains. Did you know that there hasn’t always been a 50% inclusion rate? From 1972 until 1988 capital gains were taxed at 50% but in 1988 it increased to 66.7%, then up to 75% in 1990! This lasted a decade until February 2000 when it dropped back to 66.67% until October and then down to 50% where it has been until now.

Corporations will now have an inclusion rate of 66.7 for ALL capital gains, however, there will be a lifetime capital gains exemption of $1.25 million. There is also a new Canada Entrepreneurs’ Incentive to lower capital gains for up to $2,000,000. Qualifying entrepreneurs will pay income taxes on 33.3% of their capital gains rather than the new 66.7%.

I am not focusing on the Corporate capital gains right now, maybe at a later date.


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