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When a corporation realizes a capital gain, 50% of that gain is included in the corporation’s taxable income and is subject to tax. The remaining 50% can be distributed to the corporation’s shareholders tax-free through a special account known as the Capital Dividend Account (CDA). Here we explain how it works.

Explore top bookkeeping software for Canadian SMEs. Compare QuickBooks, Xero, Sage, FreshBooks, and Wave. Learn how a CPA complements these tools.