# Do Capital Gains Count for Tax Credits?



## heffer (Feb 21, 2010)

If one only makes $5000 from his job this year and his marginal tax bracket is 20% (in BC), then when all's said and done he shouldn't pay any income tax at all right? Because he can claim the $11,000 base tax credit, in his province. 

Question is, if he also made $20,000 from capital gains that same year can he shelter some of that money in his unused portion of the $11,000 free tax credit? ie, does he pay 10% capital gains tax on the entire $20,000 capital gain ($2000), or just on a portion of it (maybe ~$800?) 

heffer


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## Square Root (Jan 30, 2010)

tax credits are available against all types of income. Your tax should be minimal I think.


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## FrugalTrader (Oct 13, 2008)

@heffer, my understanding is that 50% of your capital gains would be included as income. So it would be $5000 salary + $10,000 = $15,000 taxable income for that year.


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## CanadianCapitalist (Mar 31, 2009)

heffer said:


> If one only makes $5000 from his job this year and his marginal tax bracket is 20% (in BC), then when all's said and done he shouldn't pay any income tax at all right? Because he can claim the $11,000 base tax credit, in his province.
> 
> Question is, if he also made $20,000 from capital gains that same year can he shelter some of that money in his unused portion of the $11,000 free tax credit? ie, does he pay 10% capital gains tax on the entire $20,000 capital gain ($2000), or just on a portion of it (maybe ~$800?)
> 
> heffer


I suggest keeping it simple. Add up all your income for the year. Deduct your RRSP contributions etc. Now compute your taxes and adjust for tax credits. A even simpler way is to use an online calculator to figure it all out for you. A very good one is available here:

http://www.walterharder.ca/T1.asp

For 2010, estimated taxes for your numbers for a BC resident with no dependents is $705.


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