CIRE Taxation Tables Cheat Sheet

Basic personal amount (2026): $16,452 federally for net income up to $181,440, reduced gradually to $14,829 for net income of $258,482 or more.

Marginal vs average rate: The CIRE tests both. Marginal rate applies to the next dollar of income. Average rate = total tax / total income. A taxpayer at $130,000 taxable income does not pay 26% on all income; they pay 14% on the first $58,523, 20.5% on the next $58,522, and 26% only on the amount above $117,045.

Individuals (current confirmed rate): 50% inclusion. A $10,000 capital gain results in $5,000 of taxable capital gain added to income. Taxed at the individual's marginal rate on that $5,000.

Proposed 2/3 increase (cancelled): The 2024 federal budget proposed increasing the inclusion rate to 66.67% on capital gains above $250,000 per year for individuals, and to 66.67% on all capital gains for corporations and most trusts. The government deferred the change to January 1, 2026, then cancelled it on March 21, 2025. The one-half inclusion rate still applies to individuals, corporations and trusts, with no $250,000 threshold.

Capital gains exemption (LCGE): Individuals can claim the Lifetime Capital Gains Exemption on qualifying small business corporation shares and qualified farm or fishing property. The LCGE limit is $1,275,000 for 2026 ($1,250,000 for 2025). The LCGE shelters the taxable capital gain entirely, not just the grossed-up amount.

Capital losses: Net capital losses can only offset capital gains, not other income. Unused net capital losses carry back 3 years or forward indefinitely (ITA s.111(1)(b)).

Superficial loss rule (ITA s.54): If a taxpayer (or affiliated person) disposes of property at a loss and acquires identical property within 30 days before or after the sale, the loss is denied. The denied loss is added to the cost base of the reacquired property.

When a Canadian resident earns foreign income, the source country often withholds tax at source. Canada-US Tax Convention (Treaty): US withholding on dividends paid to Canadian-resident beneficial owners is capped at 15% (5% if the beneficial owner is a company that owns at least 10% of the voting stock).

FTC calculation: The federal FTC is the lesser of (a) foreign tax actually paid and (b) Canadian federal tax attributable to that foreign income. Provincial FTCs are calculated separately using each province's rate. The two credits together aim to eliminate double taxation, but only up to the Canadian tax rate on that income.

Non-registered account context: US dividend withholding at 15% is claimable as an FTC in a non-registered account. Inside a RRSP, the Canada-US treaty exempts US-sourced dividends from withholding. Inside a TFSA, the treaty exemption does not apply, so US dividends suffer the 15% withholding with no credit available (since TFSA income is tax-free and therefore cannot generate a Canadian tax liability to credit against).

TFSA trap: US dividends held in a TFSA are net of 15% withholding, no recovery. Clients holding US-dividend stocks should hold them in the RRSP for full dividend income, not the TFSA.

Attribution rules prevent income splitting by attributing income from transferred or loaned property back to the transferor. The two primary rules:

Spousal RRSP (ITA s.146(5.1)): The higher-income spouse contributes to a spousal RRSP in the lower-income spouse's name. The contributor claims the deduction against their own income. On withdrawal, the lower-income spouse reports the income - provided the funds remain in the plan for at least three calendar years after the last contribution. If withdrawn sooner, the attribution rule pulls the income back to the contributor (ITA s.146(8.3)). The three-year clock resets on each contribution.

Prescribed-rate family loan: A high-income family member loans money to a lower-income family member at CRA's prescribed rate. The borrower invests the funds and reports the investment income. The lender reports interest income equal to the prescribed rate. Net family tax is reduced because the investment return above the prescribed rate is taxed in the lower-income family member's hands. The prescribed rate is 3% for the fourth quarter of 2026 (also 3% in the first quarter); verify the current rate at CRA before advising.

Pension income splitting (ITA s.60.03): Up to 50% of eligible pension income can be allocated to a spouse for tax purposes. Eligible pension income includes RRIF withdrawals (age 65+), defined-benefit pension plan payments (any age), and certain annuities. Canada Pension Plan and Old Age Security are not eligible for income-splitting under s.60.03 (though CPP splitting is available under CPP regulations separately).