Can someone explain capital gains to me?
My understanding is:
- Capital gains are calculated by subtracting your ACB from your sell price
- If my ACB is $10 and my sell price is $11 then my capital gain is $1
- Capital gains are taxed at your marginal tax rate at an inclusion rate of 50% as of today
What I don't understand is what is the number that adds to my income? Using my example above, if my ACB is $10 and my sell price is $11, is it $0.50c that is added to my income or is it $1 or is it $11 or is it neither?
So let's say that my income from work is $42,201 so I'm in the first marginal tax bracket in Ontario (20.05%). If I sell 1 share of company X for $11 and my ACB is $10 is my income that I report to the CRA now $42,212 or is my income $42,202 and then I'm taxed on $0.50c at a marginal rate of 24.15% because I've now reached a new tax bracket because of the capital gain?