If you are residing in Canada, then you know very well the significance of paying your taxes on time. The Canadian government is heavy-handed when it comes to paying taxes and it includes all forms of taxes including capital gains tax in Canada. You might have to pay capital gains tax if you recently made money from the sale of an investment. When assets are sold or presumed to be sold capital gains are realized and are liable to capital gains tax. Any capital gains you make outside of a tax-sheltered account can be subject to taxation. However, only a part of the capital tax gain is subject to taxation in Canada.

Although tax is an obligation, there are things you can do legally to somehow lessen the tax obligations, especially when dealing with capital tax gains. These include the following:

• Take advantage of tax-sheltered or tax-free accounts – Capital gains tax can be avoided with the aid of a tax-free savings account. Even after a gain is achieved, the income you receive from the majority of investment types in a tax-free savings account is not subject to taxes. Additionally, money taken out of a tax-free savings account is typically not subject to taxes. Please be aware that tax-free savings accounts have an annual contribution cap, and that if you exceed that cap, you will be taxed on the excess each month.

• Track down your expenses – In order to determine whether the asset’s adjusted cost basis is higher or lower, it can be a good idea to keep note of any qualifying charges you incur in obtaining or sustaining investments. examples are legal fees and management cost.  When some assets are sold or judged sold for more than the cost basis, capital gains tax is computed. Income from capital gains indicates that your investments are increasing in value. To achieve the optimum tax outcome, however, careful planning is necessary. If you are new to these things, it can be overwhelming, especially when dealing with so many numbers. It is a good thing to ask help from experts in taxation.