RSU Tax in Canada (2026): How Vesting and Selling Are Taxed, With Worked Examples

Short answer: A restricted stock unit, or RSU, is not taxed when it is granted. When the units vest and you receive shares, the fair market value of those shares is employment income for that year, taxed in the same way as salary or a bonus, and your employer withholds tax on it. That same vest-date value becomes your adjusted cost base, or ACB. When you later sell, only the movement after vest is a capital gain or loss: sale proceeds minus ACB minus selling costs. Canada taxes half of a capital gain at your marginal rate, and half of a capital loss is an allowable capital loss that applies only against taxable capital gains. Price your own vest price, sale price, and marginal rate on the RSU sale tax calculator for Canada as you read. Rules below come from Canada Revenue Agency guidance cited by section. Dollar examples are labeled hypothetical because your share price, exchange rate, and marginal rate will differ.

By Finance Editorial Desk | October 9, 2026

Educational only, not tax or financial advice. RSU plan terms, withholding practice, and your province or territory set parts of your result. Tax rules are stated from CRA guidance current to this guide. Confirm your vest-date value, your ACB, and your reporting with your plan statement and a qualified tax professional before you file.

1. What an RSU is in Canadian tax terms

An RSU is a promise tied to shares. Your employer grants units that track the share price. During the vesting period you do not own shares you can sell. At vest, the conditions are met, the units settle, and you receive actual shares (plan designs vary, and some plans settle in cash equal to the share value; this guide covers share settlement).

CRA describes a restricted stock arrangement as one where employees acquire securities subject to conditions during a vesting period, after which they receive full rights. The tax treatment follows that shape. There is no option to exercise and no strike price to pay in a standard RSU. You did not buy the shares. They arrive because you stayed employed through the vest date or met the plan condition.

That structure puts an RSU in a different tax bucket from a stock option. An option gives a right to buy at a set price, and a separate deduction can apply to an eligible option benefit in narrow conditions. An RSU gives the shares themselves at vest, and the full vest-date value enters employment income. Do not carry option rules across to RSUs. The sections below use the RSU path only: employment income at vest, capital treatment after vest.

Many Canadian employees hold RSUs in a US-listed parent company. The plan may be administered outside Canada, the shares may trade in US dollars, and your T4 may be issued by a Canadian subsidiary or the foreign parent arrangement. The Canadian tax mechanics do not change with the listing country. The currency conversion in section 8 does.

2. The first tax moment: vesting is employment income

On the vest date, the value of the shares you receive is a benefit received through employment. It is added to your income for that year on your T4, in the same year the shares are acquired. CRA requires an employer to withhold and remit tax on a security benefit in the same way it would for a cash bonus, less any applicable deduction. For an RSU, that withholding is the reason many plans use sell-to-cover: part of the vested shares is sold or withheld at vest to fund the tax remittance, and you receive the net shares.

Three facts about the vest step shape everything after it.

First, the tax at vest is on the full value, not on a gain. If 200 shares vest at a hypothetical $120 per share, $24,000 of employment income is reported, even though you have not sold anything and the price could fall the next day. The vest-date price is set by the plan, usually the closing price on the vest date or the prior trading day. Keep the plan statement that shows that price. It is your primary record.

Second, withholding at vest is an estimate, not a settlement. Your employer withholds at payroll rates on the benefit. Your final tax on that $24,000 depends on your total income for the year, your province, your RRSP deduction, and every other item on your return. A vest in a high-income year can leave extra tax owing in April; a vest in a lower-income year can produce a refund of part of the withholding. The sale calculator linked above does not redo this step. It starts after it.

Third, the amount taxed at vest is not taxed again as a capital gain. That is what the ACB rule in section 3 does. It prevents double counting of the same dollars. If you forget the ACB rule and report the full sale proceeds as a gain, you pay tax a second time on value already taxed as employment income.

If your plan settles in cash instead of shares, there is no second tax moment. The cash received at vest is employment income, and the analysis stops. The rest of this guide assumes you received shares and later choose when to sell them.

3. Your adjusted cost base is the value already taxed

CRA states the ACB rule for securities acquired under an employment agreement in two parts: add the actual purchase price to any amount included in income as a taxable benefit for those securities. For a standard RSU, the purchase price is zero. You paid nothing out of pocket. The amount included in income is the vest-date value. Your ACB per share is therefore the vest-date value per share.

Take a hypothetical vest of 150 shares at $80 per share. Employment income at vest is $12,000. Your ACB is $12,000, or $80 per share. Sell later at $80, with no fees, and the capital gain is zero. Sell at $95 and the gain is the $15 per share that arrived after vest, not the full $95. Sell at $70 and the loss is $10 per share, measured from the value already taxed.

This rule applies the same way across multiple vests. Each vest adds shares at that vest price. If you hold shares from a March vest at $80 and a September vest at $100, your position is not two separate tax lots with separate gains for Canadian personal tax reporting. Canada uses an identical property rule for shares of the same class: the ACB is averaged across all shares of that property you own. Section 7 works that averaging, because it changes the number you enter in the calculator when you hold more than one lot.

Keep three records for every vest: the vest date, the number of shares received after sell-to-cover withholding, and the vest-date price in the currency of the listing. If the shares trade in US dollars, also keep the exchange rate on the vest date, because your ACB must be expressed in Canadian dollars (section 8). Broker statements after the sale are not a substitute for the vest statement, for the reason in section 6.

4. The second tax moment: selling is a capital disposition

When you sell RSU shares, you dispose of capital property. CRA calculates a capital gain or loss from three amounts: proceeds of disposition, ACB, and outlays and expenses to sell. The formula is:

Capital gain (or loss) = Proceeds - ACB - Selling expenses

Proceeds is the gross sale amount before fees. Selling expenses are the commission or fee to sell. ACB is section 3, averaged if section 7 applies. If proceeds exceed ACB plus expenses, you have a capital gain. If they fall below, you have a capital loss.

You report the disposition in the calendar year you sell, on Schedule 3, even if the result is a loss or the taxable amount is zero. For shares acquired under an employment security agreement, CRA directs reporting in Part 3 of Schedule 3 (line 4 for most employment securities that are not qualified small business corporation shares). The taxable capital gain from Schedule 3, line 19900 when positive, flows to line 12700 of your return. A negative result is a net capital loss for the year and is not entered on line 12700; it is tracked for carry use in section 9.

Selling in a registered account changes the frame. If vested shares are transferred into a TFSA or RRSP under the rules for those accounts, different contribution and tax rules apply from that point, and a contribution in kind has its own deemed disposition treatment. This guide and the linked calculator address a non-registered sale, which is the case most RSU holders face at vest because the shares land in a taxable brokerage account. If you move shares into a registered account, confirm the transfer tax treatment before you move them.

5. Half the gain is taxable: the 50 percent inclusion rate

Canada does not add a full capital gain to taxable income. An inclusion rate sets the share that is included. The rate in effect for 2025 and carried in CRA guidance is one half. Half of a capital gain is a taxable capital gain. Half of a capital loss is an allowable capital loss.

$$\text{Taxable capital gain} = \text{Capital gain} \times 50%$$

Your tax on that included half is at your marginal rate, the combined federal and provincial rate on your next dollar of income in the year of sale. The effective rate on the full gain is half your marginal rate. At a labeled hypothetical marginal rate of 43.41 percent, the effective rate on a capital gain is 21.71 percent. At a hypothetical 30 percent marginal rate, it is 15 percent.

A proposed increase of the inclusion rate to two thirds for gains above a threshold was announced in 2024. It never took effect. The government cancelled the proposed increase on March 21, 2025, and the one-half rate continues. Any calculator or article that applies two thirds to a personal RSU sale in 2026 is using a rate that did not become law.

Canada has no separate lower rate for shares held longer than a year. Selling the day after vest and selling five years after vest use the same inclusion rate. Time held affects the size of the gain, not the fraction included. Time held does matter for risk, covered in section 10.

6. The T5008 trap: your broker slip may not show your ACB

After you sell, your broker issues a T5008, Statement of Securities Transactions. The slip reports proceeds and may report a cost or book value in box 20. For RSU shares, that box is often wrong for tax. It can show zero, because you paid nothing to acquire the shares, or it can show a book value based on the broker transfer price rather than your vest-date taxable value.

If you file using a zero ACB, the gain becomes the full proceeds. On the hypothetical example in section 3, 150 shares sold at $95 would show a $14,250 gain instead of the correct $2,250 gain after vest ($95 minus $80, times 150). At the 50 percent inclusion and a labeled hypothetical 43.41 percent marginal rate, the error costs about $2,604 of extra tax ($12,000 of overstated gain, half included, taxed at 43.41 percent). The error always runs in one direction: a too-low ACB overstates the gain.

CRA expects you to calculate your own ACB and keep the records to support it. You are not required to attach the vest statement to your return, but you must keep documents in case CRA asks. Report the gain using your vest-based ACB, averaged across lots if you hold more than one, not the box 20 figure when it conflicts. Where your tax software imports the T5008, override the cost amount with your calculated ACB and keep a note of the vest price and date it came from.

7. Identical property averaging across vests and purchases

If you own the same shares from more than one source, CRA averages the cost. Every share of the identical property shares one ACB per share, recalculated after each acquisition. Vests, employee purchase plan buys, and open-market buys of the same stock all enter the same pool if they are the same class of shares held personally.

Hypothetical averaging example. You hold 100 shares from a vest at $80 (ACB $8,000). You later vest 100 more at $110 (adds $11,000). Your pool is 200 shares with a total ACB of $19,000, or $95 per share. You sell 120 shares at $120. Your ACB for the sale is 120 times $95, or $11,400, not 100 at $80 plus 20 at $110 tracked as separate lots. The gain is $14,400 minus $11,400 minus fees.

Two consequences follow. First, you cannot pick the high-cost lot to sell on paper to shrink a gain; the average applies. Second, the number to enter in the sale calculator is your averaged ACB per share at the time of sale, not the price from the vest that you think you are selling. If you have bought the same stock in a personal account while also receiving RSUs, the pool includes those buys. Reconstruct the average from every acquisition before the sale date. A superficial loss adjustment (section 9) also feeds back into this average when it applies.

8. US-dollar RSUs: convert each amount on its own date

Many RSUs trade in US dollars. CRA requires the gain to be calculated in Canadian dollars, with each amount converted at the exchange rate in effect when that amount arose. Proceeds convert at the sale-date rate. ACB converts at the acquisition-date rate, which for an RSU is the vest date. Selling expenses convert at the rate when the expense was incurred, usually the sale date.

Because the two sides use different dates, currency movement alone can create a taxable gain or loss. Hypothetical example, priced to isolate the currency effect. 100 shares vest at US $100 when the rate is 1.30 Canadian dollars per US dollar. ACB is US $10,000, or $13,000 Canadian. You sell at the same US $100 price when the rate is 1.38. Proceeds are US $10,000, or $13,800 Canadian. Before fees, you have an $800 Canadian capital gain with no movement in the share price. At a falling rate, the same flat US price produces a Canadian loss.

Run a fuller US-dollar example at a labeled hypothetical marginal rate of 43.41 percent. 200 shares vest at US $140, vest-date rate 1.36: ACB per share is $190.40 Canadian, total $38,080. You sell at US $175, sale-date rate 1.32: proceeds are US $35,000, or $46,200 Canadian. Fees are US $9.99, or $13.19 Canadian at the sale rate. The gain is $46,200 minus $38,080 minus $13.19, which is $8,106.81. Half is taxable: $4,053.41 (rounded). Tax at 43.41 percent is about $1,759.59. Net proceeds after fees and estimated tax are about $44,427.22 Canadian. Run your own vest rate, sale rate, and prices on the RSU sale tax calculator using its USD mode, and enter both exchange rates from your vest and sale dates.

Use a consistent rate source for both conversions and keep it with your records. CRA accepts the exchange rate in effect on the transaction day. The Bank of Canada daily rate is the usual reference for a Canadian return. Do not convert the final gain at one rate. Convert each input on its own date, then subtract.

9. Selling at a loss: allowable losses and the superficial loss window

If the price falls after vest, the sale produces a capital loss. Half is an allowable capital loss. CRA applies allowable capital losses against taxable capital gains of the same year first. An excess becomes a net capital loss for the year. A net capital loss can be carried back to reduce taxable capital gains in any of the three previous years, or carried forward to any future year with no expiry. It cannot reduce employment income, interest, or other non-capital income in the year.

Carryback is claimed on Form T1A, Request for Loss Carryback, filed with the return for the loss year, not by amending the earlier return. A carryback reduces taxable income in the earlier year but does not change net income used for credits and benefits. Apply older net capital losses before newer ones when you use a balance in a later year, and track the balance shown on your notice of assessment.

The superficial loss rule is the trap that matters most for RSU holders. In summary, a loss is superficial when you or a person affiliated with you acquires the same or identical property during the period that starts 30 calendar days before the sale and ends 30 calendar days after the sale, and you or the affiliated person still holds that property at the end of that period. Affiliated persons include a spouse or common-law partner and a corporation controlled by you or your spouse. A superficial loss cannot be deducted in the year. When you are the person who acquires the replacement property, the denied amount is usually added to the ACB of the replacement property, which defers the benefit to a later sale rather than deleting it.

RSUs trigger this rule without any purchase. Your next scheduled vest is an acquisition of identical shares. If you sell at a loss within 30 days before that vest and the vested shares are held at the end of the window, the loss can be superficial. The same risk comes from a spouse buying the stock, an automatic purchase plan, or a dividend reinvestment of the same shares in the window. Before selling at a loss, check your vest calendar, your spouse accounts, and any automatic buys for 30 days on both sides of the sale date. The linked calculator flags a loss result for this check. It does not model the adjustment. If the rule applies, your current-year claim is not the allowable loss shown, and the denied amount goes to the ACB of the replacement shares instead.

10. Sell at vest or hold: the decision after the tax math

The tax formula does not tell you when to sell. It tells you what a sale costs or saves at a given price. Three facts frame the timing choice.

If you sell immediately at vest at the vest price, the capital gain is near zero before fees, because proceeds and ACB are the same value. You have employment income tax from vest and almost no second tax. You also end your exposure to the employer stock that day. If you hold, every dollar of movement after vest is capital, half included, in whichever year you sell.

Holding concentrates risk. Your salary, your bonus, your future vests, and the shares you already hold can all depend on one company at the same time. A price fall hits the held shares as a capital loss that can only offset capital gains. It does not give tax relief against the employment income already reported at the higher vest price. An employee who vested at a hypothetical $200, paid employment tax on $200, and sells at $120 has a capital loss measured from $200, usable only against capital gains, which may arrive years later or not at all. That asymmetry is a reason many plan members sell at vest by default and diversify the proceeds. It is not a tax reason; it is a risk reason, and this guide does not recommend a personal holding period.

Timing a sale across a calendar year end changes which year reports the gain and which marginal rate applies. A gain stacks on top of your other income in the sale year. Selling half in December and half in January splits the gain across two returns, which can keep each half in a lower bracket than one combined sale. The same split also splits the loss-harvesting and superficial loss checks. Model a large gain at more than one marginal rate before you sell. The calculator applies one rate you enter. A real return applies your federal and provincial brackets to the taxable half in sequence, so a gain that crosses a bracket boundary costs less than the top-rate estimate and more than the lower-rate estimate.

11. Worked examples: gain, US-dollar gain, and loss

All examples below are labeled hypothetical. Prices, exchange rates, fees, and the 43.41 percent marginal rate are assumed for illustration and are not a quote, a rate table, or a prediction. The inclusion rate of 50 percent and the ACB and conversion rules are the CRA rules from sections 3 to 5 and 8.

Example 1: Canadian-dollar gain. 120 shares vest at $65.00 (ACB $7,800, already taxed as employment income at vest). You sell at $92.50, fees $9.99. Proceeds are $11,100. Gain is $11,100 minus $7,800 minus $9.99, which is $3,290.01. Taxable half is $1,645.01 (rounded). Tax at 43.41 percent is $714.10 (rounded). Net after fees and estimated tax is $10,375.91. The same figures are worked as a manual example on the calculator page, where you can replace the vest price, sale price, and rate with your own.

Example 2: US-dollar gain with currency conversion. This is the example from section 8. 200 shares, vest US $140 at 1.36, sell US $175 at 1.32, fees US $9.99. Canadian ACB is $38,080. Canadian proceeds are $46,200. Canadian fees are $13.19. Gain is $8,106.81, taxable half is $4,053.41 (rounded), tax at 43.41 percent is about $1,759.59, net is about $44,427.22 Canadian. About $800 of gain in a flat-price version of this trade would come from currency alone (section 8), which is why both exchange rates are required inputs rather than a single conversion at sale.

Example 3: Loss, before the superficial loss check. 150 shares vest at $210 (ACB $31,500, taxed at vest). You sell at $165, fees $9.95. Proceeds are $24,750. Loss is $24,750 minus $31,500 minus $9.95, which is a $6,759.95 capital loss. Allowable half is $3,379.98 (rounded). If you have at least that much in taxable capital gains this year, the allowable loss offsets them, worth about $1,467.28 at a labeled hypothetical 43.41 percent (value only if offset gains exist at that rate). If not, the net capital loss carries back three years or forward. Before claiming it, run the section 9 check: if a new vest, a spousal buy, or another affiliated acquisition of the same shares lands in the 30-days-before to 30-days-after window and is held at the end of it, the loss is superficial in the current year and the denied amount moves to the ACB of the replacement shares.

Compare the three examples on one point: the vest tax was the same kind in all of them, employment income on the full vest value, while the second tax ranged from tax owing, to tax owing with a currency component, to a loss asset that can only offset capital gains. That range is the reason the sale decision should be modeled before the trade, not reconstructed at filing time.

12. Reporting checklist and records to keep

Before you file the return for the year of sale, gather:

• Vest statement for every lot included in the average: vest date, shares received after sell-to-cover, vest-date price, and the listing currency.
• Exchange rate on each vest date and on the sale date if the shares trade in a foreign currency, with the source noted.
• Sale confirmation: sale date, shares sold, gross proceeds, and selling fees.
• T5008 from the broker, used for proceeds and as a cross-check, with box 20 cost replaced by your calculated ACB when the two differ (section 6).
• T4 for each vest year showing the employment benefit included, so the ACB income component can be tied to a reported amount.
• ACB averaging calculation when more than one acquisition is in the pool (section 7), including any superficial loss amount added to replacement shares.
• Notice of assessment balances for unapplied net capital losses of other years, if you plan to apply a balance on line 25300.

Report the sale on Schedule 3 in the year of disposition, carry the taxable amount to line 12700 only when Schedule 3 line 19900 is positive, and complete Form T1A only when you carry a net capital loss back. Keep the supporting documents with your return records even though they are not attached. CRA can ask for them after assessment, and the vest statement is the document that settles an ACB question.

Two filing errors account for most RSU sale problems. The first is filing from the T5008 cost box with a zero or book ACB (section 6). The second is claiming a loss that the superficial loss rule defers (section 9). Both are visible before you file if you run the checklist above.

13. Frequently asked questions

Are RSUs taxed when they are granted or when they vest? Neither the grant nor the promise is the tax event. When the units vest and shares are acquired, the fair market value is a benefit through employment for that year. Your employer withholds and remits on the benefit as it would on a bonus. Capital treatment starts only after vest, from that value as ACB.

Can I use the security option deduction on an RSU? No, not in the standard share-settled RSU case in this guide. The deduction rules attach to eligible security options and their conditions. An RSU delivers shares at vest and the value is employment income. Do not claim an option deduction against an RSU vest benefit unless a qualified professional confirms your plan meets the option rules.

What if my T5008 shows zero cost for my RSU shares? Use your own ACB. CRA sets the cost of shares acquired under an employment agreement as the purchase price plus the amount included in income. For an RSU that is the vest-date value (section 3). A zero box 20 would tax value already taxed at vest. Keep your vest statement as support.

I hold the same stock in my TFSA and from RSUs. Does the averaging mix them? The identical property average applies to property you own. Shares held inside a TFSA are held in a separate trust arrangement and investment results inside the TFSA are not reported as personal capital gains. Do not average a TFSA holding into a non-registered ACB. If you hold the same shares personally in more than one non-registered account, the personal pool averages across them. Complex holdings need professional review.

How long do I have to hold RSU shares for a lower capital gains rate? There is no lower long-term rate in Canada. The inclusion rate is one half whether you sell the day after vest or years later. Holding changes the size of the gain or loss and the concentration risk, not the included fraction.

My shares fell after vest and I paid tax on the higher value. Can the loss reduce that tax? Not directly. The vest tax was on employment income. The later decline is a capital loss, and an allowable capital loss applies only against taxable capital gains. It cannot reduce employment income of the vest year or the sale year. It can offset capital gains of the sale year, or be carried back three years or forward against capital gains in those years.

Do I report a sale if the gain is zero or the shares are sold by sell-to-cover? A sell-to-cover sale at vest to fund withholding disposes of shares at about the vest price. The capital result is generally near zero before fees, but the disposition is still a sale of capital property in that year and belongs on Schedule 3 with your records. Your final sale of the remaining shares is reported in its own year.

14. Related reading

• RSU Sale Tax Calculator (Canada) - price your vest price, sale price, currency rates, fees, and marginal rate, with a gain or loss result.
• Capital Gains Tax in Canada - the inclusion rate, ACB tracking, and loss rules beyond employment shares.
• RRSP vs TFSA in Canada - where diversified proceeds can go after a sale, and the contribution room each account uses.
• Emergency Fund in Canada - sizing a cash reserve before holding a concentrated single-stock position.