Inclusion Rate
The inclusion rate determines what portion of a capital gain is included in your taxable income. For individuals, the inclusion rate is **50% flat** on all capital gains regardless of the amount. The same 50% rate applies to corporations and trusts.
At a 50% inclusion rate, a $10,000 capital gain results in $5,000 being added to your taxable income. If your marginal rate is 40%, you'd pay $2,000 in tax on that gain — an effective tax rate of 20% on the gain itself. This preferential treatment makes capital gains one of the most tax-efficient forms of investment income.
The inclusion rate has been 50% since 2000 (it was 75% before then). The 2024 federal budget proposed a tiered system that would have raised the inclusion rate to 66.67% on individual gains above $250,000 and on all corporate/trust gains, but the **Carney government deferred this change indefinitely on 21 March 2025**. The flat 50% rate therefore continues to apply for 2024, 2025, and 2026.
Related Terms
Capital Gains
A capital gain arises when you sell a capital property — such as stocks, mutual funds, ETFs, real estate (other than your principal residence), or cryptocurrency — for more than its adjusted cost base (ACB).
ACB (Adjusted Cost Base)
The Adjusted Cost Base (ACB) is the cost of an asset for tax purposes, used to calculate capital gains or losses when the asset is sold.
LCGE (Lifetime Capital Gains Exemption)
The Lifetime Capital Gains Exemption allows qualifying Canadians to shelter up to $1,250,000 (2025) of capital gains from the sale of qualifying small business corporation (QSBC) shares, qualified farm property, or qualified fishing property.