How do I report capital gains from selling stocks and ETFs in Canada?

When you sell stocks, ETFs, or other securities in a non-registered account in Canada, you must report any capital gains or losses on your tax return. Here is how to do it for the 2024 tax year.

Step-by-step reporting process:

• Calculate your gain or loss for each disposition:
• Proceeds of disposition (selling price minus commissions)
• Minus adjusted cost base (ACB) (purchase price plus commissions)
• Minus any outlays and expenses related to the sale
• Equals your capital gain or loss

• Report on Schedule 3 (Capital Gains or Losses). List each security sold with the proceeds, ACB, and resulting gain or loss.

• Transfer the total to line 12700 of your T1 return.

Important ACB rules:

• If you bought the same security at different times and prices, you must use the average cost method to determine your ACB. Add up the total cost of all purchases and divide by the total number of shares.
• Return of capital (ROC) distributions from ETFs reduce your ACB. If your ACB reaches zero, further ROC is taxed as a capital gain.
• Reinvested distributions (such as DRIP) increase your ACB.

What you will need:

• T5008 slips from your brokerage showing proceeds of disposition. Note that T5008 slips often do not include your ACB, so you must track it yourself.
• Your own records of purchase prices, commissions, and reinvested distributions.

Exemptions:

• Securities held in a TFSA, RRSP, or RRIF are not subject to capital gains tax.
• The superficial loss rule may deny a loss if you repurchase the same security within 30 days.

Tip: Use a spreadsheet or portfolio tracking tool to maintain accurate ACB records throughout the year, especially if you make frequent trades.