Canada Capital gains tax calculator

How capital gains tax is calculated

A capital gain is the profit from selling an asset for more than you paid:

Capital gain = sale price − cost basis − selling expenses

How that gain is taxed depends on how long you held the asset and which market you're in.

Worked example (US, long-term)

Buy 100 shares at $50 ($5,000 cost basis). Sell two years later at $90 ($9,000 proceeds). Selling commission $20.

• Gain: $9,000 − $5,000 − $20 = $3,980
• Held 2 years → long-term
• Income $90,000/year (single) → 15% LTCG bracket
• Tax owed: $3,980 × 15% = $597

Had you sold after holding only 6 months (short-term), the entire gain would be taxed at your ordinary income rate (22% in this example) = $876 — almost 50% more tax for selling 6 months earlier.

Rates by region

• US: Short-term (held ≤ 1 year) = ordinary income rates (up to 37%). Long-term (> 1 year) = 0% / 15% / 20% by income bracket. Plus 3.8% NIIT for high-income filers.
• UK: Annual exempt amount deducted first (currently £3,000). Above that: 10%/18% (basic rate) or 20%/24% (higher rate), depending on asset type.
• Canada: 50% inclusion rate — half the gain is added to taxable income at marginal rates. Effective rate is roughly half your marginal income tax rate.
• Australia: 50% CGT discount on assets held > 12 months by individuals. Remaining 50% taxed at marginal rates.

Cost basis matters

Your cost basis is everything you paid to acquire the asset — purchase price plus commissions, transfer fees, and (for property) major improvements. Tracking basis carefully matters: every dollar of basis you can document is a dollar of gain you don't pay tax on.

For mutual funds and ETFs with reinvested dividends, your basis grows with each reinvestment. Failure to track this correctly is the most common way investors overpay tax — effectively paying tax twice on the same income.

Common mistakes

• Selling at 11 months instead of 12 (US). Wait the extra month — short-term vs long-term is a binary cliff.
• Wash-sale rule violations (US). You can't claim a loss on a security if you buy substantially the same security within 30 days before or after. Tax-loss harvesting requires the sale to stand.
• Forgetting the principal residence exemption. Don't pay CGT on a home sale that legally qualifies for exemption.
• Carrying losses indefinitely without using them. Most jurisdictions allow carryforward; some require annual claiming.

What this calculator doesn't cover

• US state CGT (most states tax capital gains as regular income)
• Section 1031 like-kind exchanges (US)
• Section 1250 unrecaptured depreciation on real estate
• UK Business Asset Disposal Relief (formerly Entrepreneurs' Relief)
• Canada lifetime capital gains exemption on qualified small business shares
• Australia 6-year temporary absence rule on principal residence