Plain meaning
The percentage of a capital gain that is included in taxable income.
Also called
capital gain inclusion rate
inclusion rate
Key points
- A capital gain is generally calculated before the inclusion rate is applied.
- Only the taxable portion, determined by the inclusion rate, is included in taxable income.
- Different taxpayers or thresholds may be affected differently when the government changes the inclusion-rate rules.
- Timing matters because a sale before or after an effective date can produce different tax results.
- Capital losses usually interact with taxable capital gains, so inclusion-rate changes can also affect loss planning and carryforwards.
Why it comes up
Inclusion-rate changes can materially affect investors, corporations, trusts, business owners, and timing decisions around selling capital property.