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Stock Trading Taxes Guide for Canadian Traders

What are stock trading taxes? A short introduction about Canada taxes stock trading

Trading has become one of the most popular industries of this digital world. As more people are attracted towards it, it stays growing consistently.

While people know a lot of things about it that are important to consider, most of them forget the important tax calculation part. Ignoring this often gets people in trouble as most commonly their calculations go wrong.

Moreover, the regulatory authorities operational in Canada make sure that everyone has their stock trading taxes Canada clear. So, if you are also looking to know more about Canada taxes stock trading then you are at the right place. Here we will be digging in all the details that you must know in this regard.

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How to calculate Canada stock trading taxes?

Calculating the Canada taxes stock trading is not as simple as most people think them to be. There are some important things needed to be considered by everyone which make the whole thing different for different groups of people.

Most importantly it depends on what type of stock trading you are doing. For example, you can be an investor or a day trader(more on these types later). So, your gains, as well as losses, will have different impacts on your Canada taxes stock trading.

Stock Trading Taxes

Stock trading taxes Canada for investors

Buying and selling stocks and other equities as investments makes you an investor. In this type of stock trading, the capital gains or losses can be reported as profits or losses when calculating taxes. So, the rates and percentage can be changed according to what you make.

Stock trading taxes Canada for day traders

Interestingly, day trading is known as a full-day job by which an individual can make a living. It focuses on buying and selling stocks within a day. The calculation of taxes is pretty different here. If you are a day trader then your profits are the same as a business income. In this way, the tax calculation rates and percentages differentiate.

The significance of capital for the rate of stock trading taxes Canada

While the Canada tax stock trading authorities ensure to keep everything regulated most people think that stock trading is not the thing for Canada. However, the truth is that the percentage and rate for taxes in Canada are mostly in the favor of the investor or the day trader. The terms capital gain and capital loss can make the taxes go in your favor. It depends on how you realize the gains or losses on the stocks.

What is the capital gain?

When you buy a stock at a lower price and sell it at a higher price you make a profit. This profit is your capital gain.

  • Realized Capital Gain

When you make a profit after selling the stocks the profit or the capital gain becomes “realized”. In this case, it has an impact on the tax amount.

  • Unrealized Capital Gain

There could be a case where the price of the stock is increasing but you are not selling your stocks. In that case, the capital gain but that will be “unrealized”. In the case of unrealized capital gains, there are no effects on the tax.

What is capital loss?

A capital loss can occur when you buy stocks at a high price and sell them at a lower price. Like gains, the losses can also affect your Canada tax stock trading. It works by offsetting the capital gains which may decrease your tax amount. So, in one way or another, it will bring some benefit for you. the best part here is that you can carry the loss in these ways:

  • Forward for an indefinite time
  • Backward for up to 3 years

Calculating capital loss and capital gains for stock trading taxes Canada

To calculate your Canada tax stock trading, you must know about your capital gains and capital losses. So, the first step in your calculation will be calculating these gains and losses. You can easily calculate these in two simple steps by determining the ACB(Adjusted Cost Base).

1. Determining the ACB

Calculating the ACB is not complex at all. All you need to know here are these things:

  • The original purchase price of the stock
  • Additional price for buying that stock. It can include brokerage fees

After getting these individual values you can determine the ACB by adding them.

2. Calculating the capital gains for tax

When you are calculating the capital gain for the tax you need to get the selling price of your tax without including any fees. Now you need to subtract the ACB from the amount and that will be your capital gain that will be subject to Canada tax stock trading.

Intelligent ways to reduce the Canada taxes stock trading

While you are already earning from stock trading in Canada. You can make this earning even better if you balance your investment profile. In this way, you will need to pay fewer tax rates and percentages on capital gains. So, the following are different ways of reducing your taxes.

Using the tax-advantaged accounts for your benefits

Every type of account in Canada pays taxes differently. Some registered accounts are tax-sheltered. So, you need to make your investments via those accounts and earn using those accounts as well. Using this tax-saving strategy for Canada tax stock trading can come with unbelievable results.

Use your capital losses in the right way.

This technique is also known as Tax Loss Harvesting where you make good use of your capital losses. These losses can help in reducing the capital gains when subject to tax. In this way, you can get better tax savings. However, it is important to do proper research about this method according to your investment profile.


Your stock trading earning can be so overwhelming that you forget about your taxes. However, this must not be the case. The reason is that if you take the right measures while doing Canada tax stock trading then you can end up saving some money.