RSU Tax Calculator (Canada)
Estimate Canadian federal + provincial tax on RSU vesting and post-vest disposition.
$17,486 total tax
Marginal rate 35.0%
| Vest as employment income | $50,000 |
| Capital gain on disposition | $0 |
| Taxable capital gain (50%) | $0 |
| Total federal + provincial tax | $17,486 |
How RSU vest taxation works
When your RSUs vest, the fair market value of the vested shares becomes employment income reportable on your T4 (box 38 reports the benefit, box 39 reports the 110(1)(d) deduction — which is $0 for RSUs since they're explicitly excluded). This income is taxed at your full marginal rate just like salary.
Withholding shortfall: Canadian employers typically use a flat ~37% withholding rate on RSU vests. If your marginal tax rate is higher (common in Ontario, Quebec, and BC at higher income levels), the withholding will fall short and you'll owe the difference at filing time. The calculator flags this when your marginal rate exceeds 37%.
Post-vest disposition: Your adjusted cost base (ACB) for the vested shares is the FMV on the vest date — the same amount that was added to your employment income. If you sell later for more, you have a capital gain (50% inclusion). If you sell for less, you have a capital loss (50% allowable, deductible only against capital gains).
Frequently asked questions
How are RSUs taxed in Canada?
Restricted Stock Units (RSUs) are taxed as employment income on the vest date at the share's fair market value. There is no 50% stock option deduction (s.110(1)(d) does not apply — RSUs are excluded per CRA Income Tax Folio S2-F3-C2). Any subsequent gain or loss after vest is a capital gain or loss with 50% inclusion.
Why do I owe tax on my RSUs even though I didn't sell?
Canadian RSUs are taxed at vest, not at sale. Vesting is treated as receipt of employment income at the fair market value that day. Employers typically withhold around 37% to cover this, which often falls short of the actual marginal rate for higher earners — creating a balance owing at filing time.
Should I sell at vest or hold my RSUs?
From a tax perspective, selling at vest is neutral — you've already paid tax on the vest fair market value. Holding exposes you to capital gain or loss on subsequent price movement (50% inclusion). The decision is mostly about diversification and conviction in the company, not tax optimization.
What is my adjusted cost base (ACB) after vest?
Your adjusted cost base (ACB) for the vested shares is the fair market value on the vest date — the same amount that was added to your T4 employment income. You use this ACB to calculate capital gains or losses when you later sell the shares.
Are there any special RSU withholding rules?
Employers are not required to withhold on RSU vests, but most do — typically at a flat ~37% rate. Check your company's policy. If withholding is insufficient (your marginal rate exceeds 37%), you will owe the difference when you file your tax return.
Sources
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