Dealing with capital gains and losses

Investors with portfolio exposure to investments that appreciate in value know the significance of tax-smart investing, which means investing with both your investment and tax needs in mind.

You see, for most taxpayers, capital gains are taxed at lower tax rates than other forms of investment income, such as interest, foreign income or dividends (although for some lower income tax payers, dividends are taxed at a lower rate than capital gains – see AIC’s Tax Rate Card for more details).

Investors with non-registered accounts who want to manage their tax liabilities will want to consider equity investments that provide capital gains, and especially deferred capital gains, where it makes sense for them.

But even when you are earning capital gains, or maybe losses, you will still want to manage your tax liability to the extent possible.

In this bulletin, we will discuss various strategies and methods to help deal with your capital gains and losses so that you will pay as little tax as possible.

Capital gains are triggered when you dispose, or are deemed to have disposed of an asset.

For investors, we often see capital gains in non-registered (or open) investment portfolios, although other types of assets such as business assets, personal use assets and real estate, among others, can also give rise to capital gains.