What You Need To Know About Capital Gains Taxes and Your Investments

First things first - whenever any of your assets, such as real estate or stock shares, increase in value, that is known as a capital gain. Depending on its status, capital gains are either “realized” or “unrealized.” A realized capital gain occurs when an asset has been sold for more than its original purchase price.  An unrealized capital gain is when an asset has increased in value but hasn’t yet been sold. Until you “lock in the gain” by selling, any profits are just on paper. Potential tax liability normally happens only on realized capital gains.

In Canada, if you sell any investments for more than you paid (realized capital gain) — you'll need to add 50% of the capital gain to your income. This means the amount of additional tax you’ll need to pay depends on your salary and any other sources of income. This is where charitable giving to organizations that matter to you and embody your beliefs can save you some money. If you choose to donate publicly traded shares to a foundation such as the Canadian National Christian Foundation, then potentially none of the capital gains are considered to be taxable income. Your contribution is designated as in-kind, or non-cash giving.

There are other ways to minimize taxes on capital gains. One option is to balance losses with gains. A capital loss means your investment has decreased in value, i.e. you lose money when you sell it. This can offset any capital gains, where the opposite happens. You are allowed to carry capital losses back 3 years as well as forward indefinitely into the future until your final return.

Capital gains realized within registered retirement plans are not subject to capital gains taxes. These include the Registered Retirement Savings Plan (RRSP), Registered Retirement Plan (RPP), or Registered Education Savings Plan (RESP), all of which are tax-sheltered until funds are withdrawn or deregistered. This means that unless or until you withdraw from them, your investment income continues to accrue without any taxation consequences for you.

The Canadian National Christian Foundation offers strategies and giving options that allow you to give more than you ever thought possible and in ways that will have more impact on God’s kingdom while maximizing your gift. Click here for more information.

About Canadian National Christian Foundation

CNCF is a community of givers who are seeking to advance the Kingdom of God by connecting the resources God has entrusted to them with His work on earth.

Similar to other public foundations, CNCF’s difference is the commitment of its staff and directors to the Word of God, its non-denominational history and status as a Christian foundation, and its ability to allow donors to donate anonymously, at a time and gift value of their choosing.  Learn more by visiting our website.