RSU Tax Calculator Canada

What the RSU tax calculator does

The calculator prices both parts of a Restricted Stock Unit award: the employment income on your T4 when the units vest, and the capital gain or loss when you sell the shares. It reports the vest value, the tax and payroll contributions on it, the withholding shortfall, the adjusted cost base, the taxable gain and what you keep. The first part is ordinary income at your full marginal rate; the second is a capital gain, of which only the included share is taxed. Mixing them up causes most RSU filing errors.

A worked example

500 units vest at $40 for an Ontario employee earning $90,000. The $20,000 vest value is employment income, taxed at about $6,260. No extra CPP or EI is due because the salary has already passed both ceilings. Sell-to-cover at 30% withheld $6,000, leaving about $260 owing at filing. Selling later at $55 gives proceeds of $27,500 against a $20,000 cost base, a $7,500 gain, half of it taxable, adding about $1,349 of tax. Total tax is about $7,609, an effective 27.7% on the share value, and you keep about $19,891.

Vest first, sale second

A grant is a promise, not property: you own nothing you can sell and the units can still be forfeited if you leave. On the vesting date they convert into shares, and their fair market value becomes employment income, added to box 14 of your T4, with withholding remitted and the amount counted as pensionable and insurable earnings. In effect it is a cash bonus paid in stock.

The vest value stacks on top of everything else you earned that year, so a large vest can push part of your income into a higher bracket. That same value becomes your cost base, because it has already been taxed.

Why there is no deduction

Employee stock options can qualify for a deduction that taxes only half the option benefit when the exercise price was at least the share value at grant. RSUs do not. An option is a right to buy at a fixed price and the benefit is the discount captured; an RSU has no purchase or strike price, so there is nothing for the deduction to apply to. RSUs and options are often discussed together, but at the same headline value the tax differs widely.

The withholding gap

Employers usually cover tax on a vest by selling a fixed slice of the shares, commonly 20% to 50% depending on the payroll provider and award size. On top of a full salary your real rate can be higher, leaving a balance owing; in a low-income year you may be over-withheld. The calculator uses your other employment income to work out the true extra tax and payroll cost of the vest and compares it with what was withheld.

CPP, CPP2 and EI, or the Quebec equivalents, stop at annual ceilings, so a salaried employee past them pays nothing extra on the vest, while someone on a modest salary with a large vest may pay a real amount.

Selling the shares

Proceeds less the cost base gives the gain or loss, and the inclusion rate decides how much of a gain is taxed. Holding after vest is then an ordinary investment decision. A capital loss can offset capital gains in the year, be carried back three years or forward indefinitely, but cannot be used against the employment income from the vest, which is the strongest argument for selling at vest and diversifying away from a concentrated position in your employer’s stock. The calculator reports the allowable capital loss in a loss case.

Province, currency and timing

Your province of residence on 31 December sets the provincial tax, and combined marginal rates at the same income differ by more than ten points across the country. For Quebec the calculator applies Quebec brackets, QPP, QPIP and the federal abatement.

Shares of a foreign parent are usually valued in foreign currency, so the vest value and sale proceeds must be converted to Canadian dollars at the rate for each day, and a currency move alone can create a gain. Foreign property above the reporting threshold held outside a registered plan also brings form T1135 into play.

Every figure is an estimate from the parameters shown with the results and assumes you keep all vested shares. It is not tax advice; confirm your position with your T4, your notice of assessment and a qualified adviser.

About This Tool: RSU Tax Canada

RSU tax Canada: use this tool to get an instant, accurate estimate. The figures follow official CRA guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.