After a year of significant uncertainty and proposed hikes to the capital gains inclusion rate (which was slated to rise to 66.7%), the federal government cancelled the increase in early 2025. For investors, business owners, and those with family cottages, this return to the status quo provides much-needed stability.
We can confirm that for the 2026 tax year, capital gains remain 50% taxable.
What Does the Inclusion Rate Mean?
The "inclusion rate" is the portion of your profit (capital gain) that is added to your taxable income.
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If you sell an asset for a $100,000 profit.
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At a 50% inclusion rate, only $50,000 is added to your income and taxed. The other $50,000 is tax-free.
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Had the rate increased to 66.7%, you would have been taxed on $66,700 of that same profit.
Why This Matters Now
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For Investors: You can rebalance your non-registered investment portfolios without worrying about a punitive tax hike eating into your returns. The math for selling stocks or real estate remains consistent with previous years. Touch base with your advisor to review.
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For Business Owners: If you are looking to sell your business, the tax implications for the sale of shares or assets remain favorable. This is critical for succession planning and calculating your retirement "nest egg" from the sale proceeds.
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Peace of Mind: The proposed complexity of a two-tiered inclusion rate (where the higher rate kicked in only above a certain threshold) has been shelved. This keeps the rules straightforward and easier to administer.
The Bottom Line
Stability is good for business and investment planning. You can proceed with your asset sales, succession plans, and portfolio changes knowing the tax rules have not shifted against you.
This blog was written using the assistance of AI.
Want to make sure it all adds up? Connect with us!
At JMH & Co., we are your partner for financial success.
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