On June 25, 2024, Canada's capital gains inclusion rate changed for the first time in 24 years. Here's the complete picture for your 2025 return filed in 2026.
The Old Rules (Before June 25, 2024)
50% of all capital gains included in taxable income for all taxpayers.
The New Rules
Individuals: 50% inclusion on annual capital gains up to $250,000. Above $250,000: 2/3 (66.67%) inclusion rate.
Corporations and trusts: 2/3 inclusion rate on ALL capital gains, with no threshold.
2025 Tax Year Application
For individuals, the $250,000 threshold applies to the full 2025 calendar year. Corporations pay 2/3 on all 2025 gains.
LCGE Remains at 50% Inclusion
The Lifetime Capital Gains Exemption ($1,250,000 for qualifying shares and farm/fishing property) remains taxed at 50% inclusion — the 2/3 rate does not apply to LCGE gains. This preserves the value of corporate share sale planning.
Key Planning Points
- Time large asset sales across multiple years to stay under the $250,000 individual threshold
- Corporations holding investment portfolios face significantly higher tax on future dispositions
- Tax-loss harvesting is more valuable than ever for high earners
- Review estate plans — tax on death may be higher than projected for corporations and trusts