Tax Planning

Planning for Canada’s Upcoming Capital Gains Changes

With new rules for capital gains inclusion and tax rates coming into effect in 2026, Canadians and global investors need to reassess their capital gains strategies to stay compliant and optimize outcomes.

By NomadicTax Research Team • 5-8 min read • April 5, 2026

## What’s Changing with Canada’s Capital Gains Rules As of **January 1, 2026**, Canada will introduce a higher inclusion rate for capital gains: for individuals, gains in excess of **$250,000 annually** will now have **two-thirds** of their value included in taxable income rather than the previous one-half rate. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/update-cra-administration-proposed-capital-gains-taxation-changes.html?utm_source=openai)) Corporations and most trusts will also see **all** capital gains included at the two-thirds rate. Existing proposals to increase the **Lifetime Capital Gains Exemption (LCGE)** to $1.25 million for eligible gains remain in place. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/update-cra-administration-proposed-capital-gains-taxation-changes.html?utm_source=openai)) ## Who Is Affected? Key Stakeholders - Individuals realizing **large capital gains**—sales of properties, major stock sales, or negotiations over intellectual property rights—will see substantially increased tax bills.\ - Corporations, including investment companies and trusts, must update their projections since **100% of gains**, under the new inclusion rate, are now taxed at two-thirds effective rate levels.\ - Financial advisors, estate planners, and tax counsel — these changes demand pre-2026 planning to transition deliberately rather than react under tighter timelines. ## Strategic Planning Recommendations Here are some actionable planning insights: - **Timing assets sales**: Consider accelerating income into 2025 to benefit from the 50% inclusion rate where possible. If a gain event can be triggered in 2025 without risk, you might save significantly.\ - **Use of exemptions or rollover mechanisms**: The LCGE, now at $1.25 million, offers relief for small business or farm property dispositions. Be aware of qualifying conditions.\ - **Deferral options**: For corporations, investigate opportunities to retain earnings or roll gains into qualifying assets or investments with preferential treatment.\ - **Trust structuring**: Where trust taxation is involved, revisit the trust’s purpose and timing of distributions. Ensure compliance with provisions that treat most trust gains at the higher inclusion rate.\ ## Compliance & Reporting Implications - Tax software, CRA forms, and investor reporting systems must be updated; corporate accounting and trust reporting must reflect the two-thirds inclusion rate effective January 1, 2026.\ - CRA has indicated that for gains realized **before** that date, the old inclusion rate (one-half) continues to apply. Be sure to document sale dates precisely to avoid misapplication. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/update-cra-administration-proposed-capital-gains-taxation-changes.html?utm_source=openai)) ## Example Scenario **Pre-2026 Planning:** Jane, an individual investor, plans to sell stock currently worth $400,000, which she will realize as a capital gain of $350,000 (after cost basis). If she sells by **December 31, 2025**, under the 50% inclusion rule she recognizes $175,000 of taxable gain. If she waits to sell in **2026**, the gain exceeds the threshold of $250,000, and two-thirds will be included: $233,333. Result: significantly greater tax liability. ## Key Takeaways - Act **urgently** if you have substantial capital gains pending: pushing timing can yield big savings.\ - Use available exclusions like the LCGE when structuring your disposals.\ - Seek professional advice for trusts and corporations, especially those that expect to realize large gains.\ - Maintain meticulous records—sale dates, cost basis, investment receipts—to ensure proper tax treatment.