Capital Gains Tax in Ontario

The Basics

Capital gains tax is a tax on the profit you make when you sell an asset, such as a stock, bond, or real estate. In Ontario, the capital gains tax rate for the highest income bracket is 26.76%. This means that if you earn $2,000 in total capital gains, you will pay $535.20 in taxes.

When is Capital Gains Tax Payable?

Capital gains tax is payable when you sell an asset that has increased in value since you purchased it. The tax is calculated on the difference between the sale price and the adjusted cost base of the asset.

Adjusted Cost Base

The adjusted cost base of an asset is the original purchase price plus any additional costs that you have incurred, such as commissions, fees, and renovations. When you sell an asset, the adjusted cost base is used to calculate your capital gain or loss.

Exemptions

There are a number of exemptions to the capital gains tax, including:

• The sale of your principal residence
• The sale of personal property, such as a car or boat
• The sale of a business asset that is used in the course of your business

Conclusion

Capital gains tax is a complex topic, but it is important to understand if you are planning to sell an asset that has increased in value. By understanding the basics of capital gains tax, you can avoid costly mistakes and ensure that you are paying the correct amount of tax.