A capital gain is the profit you make when you sell an asset, such as a stock, bond, or property, for more than you paid for it. In Canada, only 50% of capital gains are taxable, meaning you pay tax on half the profit.
Example
If you bought shares for $5,000 and later sold them for $8,000, your capital gain is $3,000. In Canada, only $1,500 (50% of the gain) would be added to your taxable income.
Why It Matters
- For investors: Capital gains provide a major source of investment income.
- For taxes: Understanding capital gains helps plan tax-efficient investing.
Final Thoughts
Capital gains are a key part of wealth building. Managing when and how you sell assets can minimize taxes and maximize returns.