Ms. Emily Chen, a high-net-worth client residing in Ontario, holds a diversified portfolio. She is in the highest marginal tax bracket (53.53%). This year, she realized $150,000 in capital gains from her Canadian equity holdings. To offset some of these gains, her portfolio manager suggests realizing losses from a declining sector. She has an unrealized capital loss of $75,000 in a specific technology stock. If Emily harvests this loss, what is the net taxable capital gain for the current year?

Question: Ms. Emily Chen, a high-net-worth client residing in Ontario, holds a diversified portfolio. She is in the highest marginal tax bracket (53.53%). This year, she realized $150,000 in capital gains from her Canadian equity holdings. To offset some of these gains, her portfolio manager suggests realizing losses from a declining sector. She has an unrealized capital loss of $75,000 in a specific technology stock. If Emily harvests this loss, what is the net taxable capital gain for the current year?

Answer options: ✅ $37,500

• $75,000
• $150,000
• $0

Correct answer: $37,500

Explanation: Capital losses can be used to fully offset capital gains in the current year. The net capital gain for tax purposes is then subject to a 50% inclusion rate. $150,000 (Gains) - $75,000 (Losses) = $75,000 (Net Gains). Taxable Capital Gain = $75,000 * 50% = $37,500.