Policy Statement : An individual is exempt from federal taxation on capital gains up to $500,000 over the course of their lifetime.
Taxpayers must:
- Report eligible capital gains transactions separately during annual tax filings.
- Retain documentation, such as purchase and sale agreements, to verify exemptions.
Non-compliance or fraudulent claims will result in penalties, including retroactive taxation, fines, and potential legal action.
- PurposeThis policy is designed to promote investment and economic growth by exempting a portion of capital gains from federal taxation. The policy encourages individuals to invest in various financial and real estate markets without excessive tax liabilities.
- ScopeThis policy applies to all Canadian residents earning capital gains from eligible investments, including securities, mutual funds, and real estate (excluding primary residences).
- Definitions
- Capital Gains: The profit realized from the sale of an asset for more than its purchase price.
- Primary Residence: The taxpayer’s main home, which is already exempt from capital gains tax under existing law.