Investment income and capital gains
Updated
Three kinds of investment income are taxed three different ways, and the slips you receive do not carry everything the return needs. What is missing is usually the cost base.
Quick answer: Interest is taxed at full rates, eligible and non-eligible dividends are grossed up and credited at different rates, and only part of a capital gain is included in income. The slips report proceeds but generally not your adjusted cost base, which is what decides the gain — and holding foreign property above a cost threshold triggers a separate filing.
On this page
What is included
- Interest, dividends and capital gains reported correctly, each on its own basis.
- Adjusted cost base worked out, including reinvested distributions the slips do not show.
- Capital losses applied, carried back or forward where that is worth more.
- Foreign income and the T1135 where foreign property crosses the threshold.
- Eligible against non-eligible dividends, which are credited at different rates.
- Coordination with the corporate return where the investments are held corporately.
Investment income: the cost base is what goes missing
A T5008 reports what you sold and for how much, but often not your cost, or a cost missing reinvested distributions. Filed as issued, it overstates the gain, sometimes substantially, and the CRA cannot tell.
Keeping the cost base is the investor’s job, not the broker’s. Where it has not been kept, reconstructing it is possible but takes time, and it is worth doing before a large disposition rather than after.
Capital gains held personally or in the corporation
Investment income in a corporation is taxed differently than personally, and above a threshold it reduces the small business deduction. Investment income in a corporation covers the mechanics; choose deliberately.
Who this is for, and who it is not
A good fit: anyone with a non-registered portfolio, a disposition to report, foreign holdings above the reporting threshold, or a cost base nobody has tracked.
Not a fit: someone whose investments sit entirely inside registered accounts, where nothing is reportable until money comes out. In either case we say so on the first call rather than quoting for work you do not need.
Other personal tax work
The rest of what this covers, and the page each one is on.
Common questions about investment income
Do I have to report a loss?+
What is the T1135 threshold?+
Are US dividends treated the same?+
Does crypto count?+
Starting fees
Every fee is fixed in writing before any work begins.
- Personal tax return (T1)from $125; self-employed or rental $275–$500This page
- Monthly bookkeeping, GST/PST filing includedfrom $325 a month
- Payroll, remittances, T4s and ROEsincluded in monthly bookkeeping
- Books, payroll and the year-end T2 together$500–$700 a month
- Corporate year-end and T2 returnfixed fee, quoted in writing
- Catch-up bookkeepingfrom $2,200 per year of records
- Controller or CFO supportcontroller from $1,650, CFO from $2,750 a month
- One-off advice call with a CPA$225 plus GST