Capital gains tax Canada is applicable to the sale or transfer of all capital assets in the country, except for those that are specifically exempt from taxation.
The tax is imposed on the profit amount earned from the sale of capital assets such as land, real estate property, share, bond, antiques, and other types of assets.
The department of finance is the authority responsible for assessing and implementing these taxes.
This department is also responsible for providing the government with advice and analysis on various financial strategies.
Canada's federal government first introduced capital gains taxes in the 1972, prior to which all capital gains were tax-free. Ottawa introduced capital gains taxes to offset the cost of aboloshing the state's inheritance taxes.
Capital gains tax was introduced in Canada to finance the growing costs of the country's social security system. Since then there have been a number of amendments to the law. Sale of the principal residence in Canada is exempt from this tax.
Profits made from tax saving instruments like RRSP's, RRIF's, or RESP's are also free from taxation in Canada. The best way to avoid capital gains tax in Canada is to buy insurance to the offset taxes.
Capital gains tax exemption was introduced in 1985 exempting Canadian residents from paying capital gains tax up to $100,000. But the exemption was abolished on February 22nd, 2004.
Owners of qualified small businesses in Canada are eligible for an exemption of up to $500,000.
