How Is Investment Tax Reported in Canada?

If you sold a stock, bond, or investment and have earned money from an investment in Canada, you must report the income on your Canadian taxes.  It is important to determine whether or not the investment income is considered capital gains, as this will affect your taxes for the coming year.

How is Investment Tax Calculated?

The amount of tax you pay depends on how much you made, the investment account used, and what type of investment it was.

For most capital gains, 50% of the total profit will be taxable. So, if you earned $2,000 in profits from an investment, only $1,000 would be taxable. The other 50% is considered a capital gain and will not be taxed.

Dividends are generally taxed at the same rate as any other income you make from your job or business. To understand the interest payments required for dividend investments, refer to line 40425 - Federal Dividend Tax Credit.

If you made the investment using your tax-free savings account (TFSA), you will not have to pay any taxes on the money earned through that account. However, if you withdraw more than your annual contribution limit, you will be required to pay a penalty for withdrawing too much.

Understanding investment taxes can be a complex process. Working with a professional CPA is the best way to ensure compliance. At HWGCA, our team of chartered accountants can help you understand how to best report your investments and income for taxes. Contact us today to learn more about our services.

Located in Surrey (Cloverdale), British Columbia, since 1971, HWG, Chartered Professional Accountants proudly helps clients throughout the Lower Mainland and across Canada.

Our team of chartered professional accountants provides helpful business and personal tax services. Our continued growth proves the success of our client relationships.