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.
How RSU taxation actually works in Canada
Restricted Stock Units are taxed as employment income the moment they vest — not when you sell them — which catches a lot of people off guard when a large tax bill shows up for shares they're still holding.
Vesting is the taxable event, not selling
When your RSUs vest, the fair market value of those shares on that date is added to your employment income and taxed at your marginal rate, exactly like a cash bonus. Many employers automatically sell a portion of vested shares to cover the withholding tax (a "sell-to-cover"), but if yours doesn't, you're responsible for ensuring enough tax gets paid — either through payroll withholding or at tax time — regardless of whether you've sold a single share.
A second tax event happens when you eventually sell
Once your RSUs vest and get taxed as income, the vesting-date value becomes your adjusted cost base. Any gain or loss between that value and your eventual sale price is taxed separately as a capital gain or loss, with 50% of the gain included in taxable income. This means a single RSU grant can trigger two different types of tax at two different times — employment income tax at vesting, capital gains tax at sale — and tracking the cost base correctly matters for accurate reporting.
Why concentration risk is the real danger, not the tax
The tax treatment of RSUs is well understood, but the bigger risk many employees underestimate is holding too much of their net worth in a single company's stock — the same company that pays their salary. If that company has a bad year, you can lose your job and watch your investment portfolio drop simultaneously. Many financial advisors recommend selling vested RSUs promptly and diversifying, rather than holding out for further appreciation, specifically to avoid this double exposure.
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.