Free · Alberta · 2025

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Stocks & Crypto

What’s taxable, and what you can claim

An in-depth, plain-English look at how Canada taxes your investments — what counts, what you can write off, and the traps to avoid.

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When you sell stocks or ETFs in a regular (non-registered) account, only half of your profit is taxed — but you have to track your own costs and report every sale.

How it's taxed

Only half (50%) of your capital gain is taxable. A capital gain is what you sold for, minus what you paid for it (your "adjusted cost base" or ACB), minus selling costs.
Important update: the proposed increase to a two-thirds (66.67%) inclusion rate was cancelled in March 2025. For 2025 and 2026 the rate stays at 50% for everyone, with no $250,000 threshold.
There’s no special flat "capital gains tax." Your taxable half gets added to your other income and taxed at your normal rate. In Alberta the most a gain can be taxed is about 24% of the total gain (top earners, 2025).
Canadian dividends use a "gross-up and credit" system that lowers your real rate: eligible dividends (most public companies) are bumped up 38% on paper, then you get a federal credit of ~15% and an Alberta credit of ~8% of that grossed-up amount.
Non-eligible dividends (less common for public stocks) get a smaller 15% gross-up and smaller credits.
Buying commissions get added to your cost base, and selling commissions reduce your sale proceeds. Either way they lower your gain, but you don’t deduct them separately.

What you can claim

Capital losses offset capital gains. Half of a loss (an "allowable capital loss") cancels out the taxable half of your gains in the same year.
Unused losses don’t disappear: carry them back up to 3 years (to recover tax you already paid on past gains, using Form T1A) or carry them forward forever.
Interest on money borrowed to invest is deductible on line 22100 (via Schedule 4) if the investment can earn income like dividends. It isn’t capped by how much income you actually earned that year.
Investment counsel or management (advisory) fees for a non-registered account are deductible carrying charges, as are accounting fees for managing your investments.
Donating publicly listed shares directly "in kind" to a registered charity wipes out the capital gain (zero inclusion) and gives you a receipt for full value — you must transfer the shares themselves, not sell and donate cash.
The Lifetime Capital Gains Exemption (now $1.25M) was kept, but it only applies to qualified small-business shares and farm/fishing property, not ordinary public stocks.

What you can't

You can’t use capital losses against regular income like salary, interest, or dividends — they only offset capital gains. (The one exception is the year of someone’s death.)
You can’t deduct trading commissions as an expense on line 22100. CRA is clear: they go into your cost base (buys) or reduce proceeds (sells) instead. Don’t double-count.
You can’t deduct loan interest if the investment can only ever produce capital gains (never dividends), or interest on money borrowed to put into an RRSP, TFSA, or FHSA.
You can’t claim losses on stocks held inside a TFSA or RRSP. Gains there are tax-free, but losses give you nothing.
There’s no "pick which shares I sold" trick. CRA makes you use one blended average cost across all identical shares of the same stock.

How to report it

Report every sale on Schedule 3, which flows to line 12700 of your return. List the proceeds, your cost base, and any selling costs.
Dividends show up on a T5 slip (line 12000); ETF and fund distributions show up on a T3 slip.
When you buy the same stock or ETF at different prices, you must use one weighted-average cost per security. Each new purchase re-averages your cost; a partial sale uses that average.
Don’t blindly trust slips. The T5008 often leaves the cost (Box 20) blank or wrong, and pairing a T5008 with a T3 can make you report the same gain twice. Reconcile against your own records.
Reinvested ("phantom") fund distributions on a T3 are taxable even though you got no cash — and you must add them to your cost base, or you’ll be taxed twice.
Identical shares held in different non-registered brokerage accounts must be pooled together for the average-cost calculation.

Watch-outs

Superficial loss rule: if you (or your spouse, or your own RRSP/TFSA) buy back the same stock within 30 days before or after a loss sale and still hold it, the loss is denied for now — it gets added to the new shares’ cost instead.
So selling a loser in your taxable account and rebuying it in your TFSA or RRSP backfires: the loss is denied with no benefit recoverable inside the registered plan.
Trading too actively can get your gains reclassified as business income, meaning 100% (not 50%) is taxable. CRA looks at frequency, short holding periods, your market knowledge, and use of borrowed money. (The flip side: losses then become fully deductible.)
Return of capital (ROC) distributions aren’t taxed when received but quietly shrink your cost base, raising your eventual gain. If your cost base hits zero, further ROC becomes a taxable gain right away.
US stocks in a non-registered account count toward the T1135 foreign-property form if your total cost of foreign property tops $100,000 CAD at any point in the year — even held at a Canadian broker.
Don’t auto-import T5008 slips into tax software without checking; a blank or wrong cost figure produces an incorrect gain.

Good to know either way

Registered accounts (TFSA, RRSP, FHSA) shelter growth from tax but cut both ways: you can’t claim losses inside them, and selling a loser in your taxable account to rebuy it inside your TFSA/RRSP triggers the superficial loss rule and denies the loss entirely.
Record-keeping is on you, not your broker or exchange. Track your own adjusted cost base (one blended average per security/coin), keep records for at least 6 years, and never assume a slip’s cost figure is correct.
There’s a line between investing and running a business. Frequent trading, short holding periods, deep market knowledge, and use of borrowed money can make CRA tax you on 100% of your gains as business income instead of 50% as capital gains — and the same can make even a TFSA taxable.
Watch the T1135 foreign-property form: if the total cost of foreign property (US stocks in a non-registered account, or foreign-held crypto) tops $100,000 CAD at any point in the year, you must file it, and late-filing penalties are steep. Property inside registered plans is excluded.
This is general educational information for Alberta residents — not tax, legal, or investment advice. Rules change and individual situations vary, so confirm with CRA or a qualified advisor before filing.