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Investing in Canada

Capital gains, registered accounts and pension rules for long-term investors in Canada. Amounts in Canadian dollars; every figure with its source and an as-of date.

Key figures

50%Capital gains inclusion rateHalf of a capital gain is added to taxable income; the planned increase to two thirds was cancelled in March 2025.Source: Income Tax Act s. 38 (Justice Laws) ·
20.5%Federal income tax, second bracketOn taxable income from 58,523 $ to 117,045 $ in 2026; the lowest bracket is 14 %. Provincial or territorial tax comes on top.Source: CRA – Federal tax rates and brackets 2026 ·
CA$7,000TFSA contribution limit per yearTax-Free Savings Account: gains, dividends and withdrawals are tax-free; unused room carries forward.Source: CRA – TFSA dollar limit ·
CA$33,810RRSP deduction limit, maximum per yearRegistered Retirement Savings Plan: 18 % of the previous year's earned income up to this cap, deductible from income; withdrawals are taxed.Source: CRA – RRSP dollar limit ·
65Old Age Security from ageThe Canada Pension Plan can start between 60 and 70; each month of deferral raises the payment.Source: Government of Canada – Old Age Security eligibility ·

How gains are taxed

Canada has no separate capital gains tax. Half of a realised gain (the inclusion rate) is added to your other income and taxed at your marginal rate, federal plus provincial. The other half is not taxed at all. Gains are only taxed on sale; losses offset gains of the same year, can be carried back three years or forward indefinitely. Eligible dividends from Canadian companies are grossed up and offset by a dividend tax credit; interest is taxed in full as ordinary income.

Inside a TFSA or RRSP none of this applies: a TFSA shelters gains and income for good, an RRSP defers tax until withdrawal. The First Home Savings Account (FHSA) combines both for a first home: up to 8,000 $ a year and 40,000 $ in total.

Example: selling an equity ETF with a CA$3,000 gain
GainCA$3,000
Non-taxable portion (50%)−CA$1,500
TaxableCA$1,500
Federal tax (20.5%)CA$307.50
Source: CRA – Federal tax rates and brackets 2026, Income Tax Act s. 38 (Justice Laws) ·

Pension

  • Old Age Security (OAS) is paid from age 65 to residents who meet the residency test; deferring it by up to five years raises the pension by 0.6 % per month, up to 36 % at age 70.
  • The Canada Pension Plan (CPP) is earnings-related and can start between 60 and 70: taking it at 60 reduces the payment by up to 36 %, waiting until 70 raises it by up to 42 %.
  • Private provision runs through registered accounts: RRSP contributions are deductible up to 18 % of earned income, TFSA room grows by a fixed amount each year, and the FHSA adds 8,000 $ a year for a first home.
Source: Government of Canada – Old Age Security, Government of Canada – Canada Pension Plan, CRA – Contributing to your FHSA

Latest changes in Canada

CanadaTotal Cost Reporting takes effect for funds and segregated fundsRegulationCanadaCapital gains inclusion-rate hike cancelledTax lawCanadaBudget 2024 proposes higher capital gains inclusion rateTax lawCanadaCanadian markets move to T+1 settlementMarketCanadaHome Buyers' Plan limit raised to $60,000Retirement
All changes in Canada →
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