If you rushed the sale of a property or a stock position in 2024 to get ahead of the capital gains tax increase announced that June, there is something worth knowing: that increase no longer exists.
It was announced, then deferred, then cancelled. The Canada Revenue Agency records the outcome in one sentence: the proposed increase was cancelled. Anyone who made a financial decision based on the announcement was acting on a rule that never came into force.
- The inclusion rate is one-half. Half of your capital gain goes into taxable income. The move to two-thirds was cancelled.
- The larger lifetime exemption stayed. CAD 1,250,000 on the sale of qualifying property, which is a maximum deduction of CAD 625,000.
- What you owned abroad when you arrived is not taxed here on what it gained before. The CRA treats you as having acquired it at its fair market value on the day you became a resident.
What was announced and what actually happened
When | What was said |
June 2024 | Budget 2024 proposes raising the inclusion rate from one-half to two-thirds, with an annual CAD 250,000 threshold for individuals |
January 2025 | The government defers the start date from June 25, 2024 to January 1, 2026 |
After that | The increase is cancelled. The CRA goes back to administering the enacted rate of one-half |
That is why so much writing on this topic, including articles published in 2024 and still online, is out of date. It was not wrong at the time. The rule changed direction twice afterwards.
The rule that applies now
A capital gain is the profit on selling an asset: the sale price minus what you paid for it, minus the costs of selling. It shows up when you sell an investment property, shares, fund units or an interest in a business.
Canada does not tax the whole gain. Only the inclusion rate goes into your income, and today that is one-half. The arithmetic is direct:
Step | Example |
Sale price | CAD 400,000 |
Less the cost of the asset and selling costs | CAD 300,000 |
Capital gain | CAD 100,000 |
Half goes into taxable income | CAD 50,000 |
Notice what the table does not say: how much tax that costs. There is no flat rate. That CAD 50,000 is added to your income for the year and taxed at your marginal rate, federal and provincial. The same sale lands very differently on someone earning CAD 45,000 and someone earning CAD 200,000.
If you are still working out how the brackets operate here, our complete guide to the Canadian tax system explains the structure.
The lifetime exemption that did survive
The rate increase was cancelled, but the increase to the lifetime capital gains exemption was not. For 2025 it is CAD 1,250,000 on dispositions of qualifying property, which means a maximum deduction of CAD 625,000. Indexation of the exemption resumes in 2026, so the current-year figure can be higher.
It does not apply to every sale. It covers mainly qualified small business corporation shares and qualified farm or fishing property. An investment condo does not qualify.
The home you live in has its own rule
The principal residence exemption can eliminate the gain on selling the home you lived in, for each year it is designated as your principal residence. It is why many people sell their own home and pay no tax on the appreciation.
There is a catch, and it is procedural rather than arithmetic: even when the gain is fully exempt, the sale still has to be reported on your return. Not reporting it is what turns an exempt transaction into a problem with the CRA.
The property you already owned when you arrived
This is the part that rarely appears in articles about capital gains, and the part that matters most if you came from Brazil.
When you become a resident of Canada, the CRA treats you as having sold and immediately reacquired the property you already owned, at a value equal to its fair market value on the day you became a resident. That value becomes your cost here.
The practical consequence is large: the appreciation of that apartment in Brazil before you arrived is not taxed in Canada. Only what it gains from your arrival date onward enters the Canadian calculation.
Which produces the cheapest and most forgotten task of the whole move: keep a record of the fair market value of your property on the date you became a resident. An appraisal, a valuation report, comparable sales in the area. People who skip it find out years later, at the point of sale, with no way to prove the cost. That same value decides whether you owe the foreign property form, which we cover in our guide to your first tax return in Canada.
What about tax in Brazil?
The Canada-Brazil Income Tax Convention, signed on June 4, 1984, is in force and exists to stop the same income being taxed twice. It does not automatically end the Brazilian obligation: selling a property located in Brazil has its own treatment with the Receita Federal, and your position there depends on whether you filed the Declaração de Saída Definitiva.
Two calculations, in two countries, and they have to be done looking at each other. This is exactly the kind of transaction where deciding from one side only turns out expensive.
Four places where the rules trip people up
- Deciding based on the 2024 announcement. The increase was cancelled. Selling in a hurry because of it makes no sense today.
- Assuming the whole gain is taxed. Half enters your income, not the total.
- Not reporting the sale of your own home. Exempt does not mean exempt from reporting.
- Not recording the value of your property on your arrival date. Without that figure you lose the cost the rule gives you.
A rule that changed direction twice
The word stuck to this subject is “increase”, and it has aged badly. What exists today is the same inclusion rate as before, a larger lifetime exemption, and, for anyone who arrived from Brazil, a cost that starts counting on the day you landed. Planning around what applies now beats reacting to what was announced.
MB Tax Solutions works with individuals, self-employed professionals and businesses across Canada, in English and Portuguese, with offices in Toronto, Moncton, Montreal, Rio de Janeiro and Georgetown. If a sale is on your horizon, see our tax planning service or talk to our team.
Frequently Asked Questions (FAQ)
No. The increase in the inclusion rate from one-half to two-thirds, proposed in June 2024, was first deferred to January 1, 2026 and then cancelled. The CRA went back to administering the enacted rate of one-half.
One-half. That means 50% of your capital gain enters your taxable income for the year and is taxed at your marginal rate, federal and provincial. The other 50% is not taxed.
Sale price minus the cost of the asset minus the costs of selling. On a CAD 400,000 sale with a total cost of CAD 300,000, the gain is CAD 100,000 and CAD 50,000 enters your taxable income.
There is no flat rate. The taxable half is added to your income for the year and taxed at your marginal rate. The same sale lands very differently on a low income and a high income.
For 2025 it is CAD 1,250,000 on dispositions of qualifying property, a maximum deduction of CAD 625,000. It applies mainly to qualified small business corporation shares and qualified farm or fishing property. Indexation resumes in 2026.
The principal residence exemption can eliminate the gain for the years the home was designated as your principal residence. Even when the gain is fully exempt, the sale still has to be reported on your return.
