What is the capital gains inclusion rate for 2024 in Canada?

For the 2024 tax year, the capital gains inclusion rate in Canada depends on the amount of capital gains realized and whether you are an individual or a corporation.

For individuals (effective June 25, 2024):

• The first C$250,000 of net capital gains in a year is included at a rate of 50% (meaning half is taxable).
• Any net capital gains above C$250,000 are included at a rate of 66.67% (two-thirds is taxable).

For corporations and trusts:

• All capital gains are included at the 66.67% rate, with no C$250,000 threshold.

Important timing note:

The increased inclusion rate took effect on June 25, 2024. Capital gains realized before that date are included at the 50% rate regardless of amount. For the 2024 tax year, the CRA uses a blended calculation to account for gains realized before and after June 25.

How it works in practice:

If you are an individual who realized C$400,000 in net capital gains after June 25, 2024:

• First C$250,000 x 50% = C$125,000 taxable
• Remaining C$150,000 x 66.67% = C$100,005 taxable
• Total taxable capital gain: C$225,005

This taxable amount is then added to your other income and taxed at your marginal tax rate.

Key considerations:

• The Lifetime Capital Gains Exemption (LCGE) for qualified small business shares and farm/fishing property increased to C$1,250,000 in 2024.
• Capital losses can only be used to offset capital gains, not other types of income.
• Unused capital losses can be carried back 3 years or carried forward indefinitely.