Individual vs Corporate
Capital Gains Tax Calculator

How Individual Capital Gains Tax Works

When you sell an investment personally, the capital gain (proceeds minus adjusted cost base) is partially included in your taxable income. Canada uses a 50% inclusion rate: half the gain is taxed at your marginal rate, while the other half is tax-free.

• Capital gain = Proceeds − Adjusted Cost Base
• Taxable capital gain = 50% of the gain
• Taxed at your combined federal + provincial marginal rate
• Effective rate ranges from 12.5% to 27% depending on province and income

When Does Personal Ownership Win?

• Selling qualified small business corporation (QSBC) shares — LCGE exempts up to $1,250,000
• You need the after-tax proceeds immediately
• Your marginal rate is low (under ~$150K total income in Alberta)
• The asset qualifies for the Principal Residence Exemption

How Corporate Capital Gains Tax Works (CCPC)

When a Canadian-Controlled Private Corporation (CCPC) realizes a capital gain, the tax treatment involves multiple layers designed to integrate with the personal tax system:

Step 1: Corporate Tax

The taxable half of the gain is taxed at the combined corporate investment income rate (38.67% federal + provincial). A portion of this tax (30.67%) is refundable through the RDTOH mechanism.

Step 2: Tax-Free Capital Dividend (CDA)

The non-taxable half of the gain (50%) is added to the Capital Dividend Account. This can be distributed to shareholders completely tax-free as a capital dividend.

Step 3: Taxable Dividend

Remaining corporate cash (after tax, plus RDTOH refund) is paid as a non-eligible taxable dividend. The shareholder pays personal tax on this dividend, offset by dividend tax credits.

When Does Corporate Ownership Win?

• You want to defer personal tax by leaving funds in the corporation
• The corporation has capital losses to offset the gain
• You plan to reinvest proceeds into active business operations
• Income splitting through family shareholders is available