RSU & Stock Option
Tax Calculator Canada
Calculate the exact Canadian tax on your RSUs or employee stock options. RSUs are taxed as employment income at Fair Market Value on vesting — your employer must withhold. Capital gains apply only on post-vesting appreciation.
Your equity compensation
• RSUs: taxed as employment income at FMV on vest date (T4 Box 38)
• Employer must withhold tax at source since 2011
• Capital gain = (sale price − FMV at vest) × 50% inclusion
• Over $250K/yr capital gains: 66.7% inclusion rate (2024+ rules)
• Sell immediately? Capital gain = $0
RSU and stock option tax calculations are based on 2026 CRA rules. Capital gains inclusion rate changes may apply based on your specific situation. Always consult a tax professional before exercising options or selling shares. Not tax advice. Terms →
When your RSUs vest, the Fair Market Value is added to your T4 as employment income — taxed at your full marginal rate. Your employer must withhold this tax since 2011. If they withhold at too low a rate, you owe the difference at tax time. Always sell enough shares to cover the tax bill.
Since 2021, the favourable 50% deduction for stock options is capped at $200,000 of underlying stock value per year (based on grant date FMV). Options above this limit are taxed at full marginal rates. CCPC options are exempt from this limit and have different tax timing.
After your RSUs vest, any additional price appreciation is a capital gain — not employment income. You pay capital gains tax only on the appreciation above the vest-date FMV. Inclusion rate is 50% on the first $250K annually, 66.7% above that (2024+ federal rules).
The employment income from RSU vesting creates RRSP contribution room. Contributing the after-tax proceeds to your RRSP can partially offset the tax hit. Talk to a financial advisor about your RRSP room before your vest date.
Frequently asked questions
Are RSUs taxed when they vest or when I sell?
RSUs are taxed as employment income when they vest (when the shares are delivered to you), not when you sell. The Fair Market Value on the vest date is added to your T4. If you later sell for more than the vest-day price, the gain is a capital gain. If you sell for less, it's a capital loss.
Does my employer automatically withhold RSU tax?
Yes — since 2011, Canadian employers are legally required to withhold income tax on RSU vesting events. However, the withholding rate may not match your actual marginal rate (especially if you have a high salary). You should review your withholding with your payroll department and set aside additional funds if needed.
How are CCPC stock options taxed differently?
For Canadian-Controlled Private Companies (startups, private companies), stock option income is deferred — you're only taxed when you sell the shares, not when you exercise the options. This is a significant tax advantage. Additionally, CCPC options are exempt from the $200K annual deduction limit.