Investments · Tax
The posted return is not the one you keep.
Interest, dividends and capital gains are not taxed the same way. At equal returns, the type of income changes what is left after tax.
What this page covers
The points to look at
- 01Interest taxed in full, capital gains on a fraction only.
- 02Dividend tax credit on eligible Canadian corporations.
- 03Placing the right income type in the right account, when you hold several.
How each type of investment income is taxed
| Income | Tax treatment | What to remember |
|---|---|---|
| Interest | Taxed as ordinary income in a non-registered account. | Better held in a tax-sheltered account. |
| Dividends | They receive a tax credit, which lowers the tax paid. | The credit depends on the type of dividend. |
| Capital gains | Only part of the gain is taxable, and only on sale. | The timing of the sale changes the tax paid. |
| RRSP withdrawals | Taxed as income when withdrawn. | Large withdrawals can push you into a higher bracket. |
Ask before you sell or withdraw
- 1.What tax slip will I receive, and when?
- 2.Does my sale trigger a gain or loss to report?
- 3.Can a capital loss reduce a gain from another year?
- 4.Does my spouse have contribution room to use before me?
Guides
Read next
// Tax
Capital Gains: Keep Documents to Calculate Cost
Keep the purchase price, acquisition costs, additions to cost and disposition expenses to calculate the taxable gain.
// Investments
Return of Capital in a Fund: Effect on Tax Cost
Return of capital is not income: it reduces the cost base and increases the future gain.
// Investments
TFSA or RRSP: Choose by Goal and Tax Rate
Choose between TFSA and RRSP based on the goal, the withdrawal horizon and your current and future tax rates.
Frequently asked
What people ask most
The purchase price and its acquisition costs (transfer duties, notary, inspection), plus additions to cost: durable improvements such as an extension, a roof or systems, backed by receipts. Disposition expenses, meaning the commission and legal fees of the sale, are added in the final calculation.
Put numbers on your decision
Open the calculatorsFor information only: not an approval, and not a rate offer.
A question about your situation?
A Quebec broker answers, with no commitment.