Sun Life Financial - Financière Sun Life
 

Capital gains vs. RRSP tax comparison calculator
Are you better off investing inside or outside your RRSP?

When you invest in an RRSP, taxes are deferred on the growth of your savings, as well on the contributions you make. When you do withdraw money from an RRSP, the withdrawals are taxed as income.

When you invest outside an RRSP, the sale of a stock or an equity-based fund triggers a capital gain or a capital loss at the time of withdrawal. A capital gain or loss is the difference between the sale price of a stock and its adjusted cost base (ACB). If stock is sold above ACB, the difference is a capital gain. If a stock is sold below ACB, the difference is a capital loss. When you sell, you pay tax only on a portion of the capital gain under current tax rules.

If the investment is an equity-based fund, the fund's capital gains may be quite different from the appreciation of the stocks upon which the unit value is based. This tool helps you determine whether you’d have a greater amount of money if you invested inside or outside of your RRSP, based on the assumption you’re investing in stock or equity-based funds.

Investment information

$

 % per year
 years
 %
 %



Tell me more

Enter the required information and then select Calculate.

Tell me more
Assumed rate of return
The assumed rate of return is used to calculate the future value of your balance and the income that you may be able to draw during each year of your retirement. It is a purely hypothetical number used for illustration purposes only.
 
If you have completed the Asset Allocation tool, consider using the assumed rate of return corresponding to your risk profile:
  Conservative: 4.25%
  Moderate: 5.00%
  Balanced: 5.50%
  Growth: 6.00%
  Aggressive: 6.25%
 
To access the Asset Allocation tool, select Tools from the Resource Centre drop-down menu on Plan Member Services website.
Tell me more

Marginal tax rate
This represents the tax rate that you pay on each additional dollar of income earned, and is made up of federal and provincial tax. This percentage represents the reduction in the return that will be applied and accounts for taxes that you may pay.

You may be responsible for paying more or less in taxes. Consult with your tax or financial advisor for further information.


Tell me more

Capital gains tax rate
This is also referred to as capital gains inclusion rate.

Under the current tax rules, only 50 per cent of a net capital gain is taxable. In other words, only 50 per cent of the net capital gain is considered income when filing your taxes.


Tell me more

Assumptions
This calculator assumes:


  • Both the federal and provincial governments apply the same capital gains tax rate
  • This calculation assumes the rate of return is derived only from capital gains.
  • The marginal tax rate is the rate in effect at the time of sale of the investment
  • The tax refund for the RRSP contribution is available immediately for re-investment as an additional contribution.
  • The unused RRSP deduction limit is sufficient to allow a full deduction for the RRSP contribution