RSU tax in Canada: What you need to know

If you work for a company in Canada, a benefit you might receive when you join the company or hit key performance targets are Restricted Stock Units (RSUs).

This can be a great benefit to have, as it means you’ll end up owning shares in the company. But there are also tax implications to consider, and that’s what we’ll be looking at here.

Below, we’ll run through everything you need to know about Canada RSU tax for employees. We’ll look at how RSUs are taxed in the country, who is affected and which tax rates might apply to you.

We’ll also show you an ideal solution for selling your RSUs in a different currency - the Wise account. It lets you hold and convert between 40+ currencies including Canadian dollars, for low fees* and mid-market exchange rates.

But first, a quick overview of what RSUs are and how they work.

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What are RSUs?

Restricted Stock Units (RSUs) are a kind of employee compensation or benefit issued by a company. They are essentially a promise to transfer shares in the company to an employee according to a set schedule.

A company may want to offer them as an incentive for new employees, helping them secure the best talent. Or they may grant RSUs to staff on different occasions, such as on an annual basis, to reward long service or when the company reaches a particular milestone or performance-related target.

The key thing to note is that RSUs don’t have monetary value at the time they’re granted. After a set period of time known as a ‘vesting period’, the RSU will convert to actual stock which can be sold for a cash value.

Read more about the difference between RSUs and stock options here in our handy guide.

When RSUs are sold - and even before then - there will almost certainly be tax implications to consider.

This is what we’ll be exploring below, specifically in relation to selling RSUs in Canada. The country has its own tax laws, and it’s crucial to understand how they’ll affect you in this situation.

So, it’s well worth taking the time to understand your obligations and perhaps seek professional tax advice too.

How are RSUs taxed in Canada?

Now, let’s dive into how RSUs are taxed in Canada, including tax rates and who is affected.

When are RSUs Taxed? (Vesting vs. Sale)

Generally speaking, RSUs in Canada are taxed at the time of vesting - so, at the end of the vesting period.¹

This is when the RSUs are officially transferred over to you, and you become the owner of the shares. At this point, you’ll be liable for income tax, based on the fair market rate of the RSUs on the date of vesting.¹

However, there are situations when RSUs become taxable at the time they are granted. The Canada Revenue Agency (CRA) considers some employee benefit schemes to be part of salary deferment arrangements (SDAs) and are thereby subject to tax right away.¹

But it all depends on how your company’s RSU scheme is structured - speak to your employer or a tax adviser for more information.

Want to sell your shares after they vest? In Canada as in many other countries worldwide, the profits from selling investments are subject to capital gains tax (CGT).¹

There’s also the possibility that you may be liable for capital gains tax in another country when you sell your shares - if you’re a tax resident there.

This is why it’s crucial to seek professional tax advice personalised to your specific circumstances. This can help you to understand your obligations and paying either too much or too little tax.

Breakdown of Income Tax, Capital Gains Tax, and Other Levies

When your RSUs vest, you’ll be liable for income tax based on their market value. This is because your RSUs may be seen as employment-related income.

To give you an idea of what your tax bill is likely to be, it can be useful to know a little about how income tax works in Canada. There are two types of income tax - federal, and provincial/territorial.

Provincial/territorial tax rates vary depending on the region, but federal taxes are set at the following rates for 2025:²

There’s also capital gains tax (CGT) to consider, for when you decide to sell your shares.

In Canada, CGT is levied on half of the gains you earn from the sale of shares. So if you earn $1,000 CAD from your shares, you’ll only be taxed on $500 CAD of it. This is known as the capital gains inclusion rate.³

This is the rate at the moment, but the Canadian government is planning to increase it to 66.6% on 1st January 2026.³

And as we mentioned above, you’ll need to check whether you’re liable for CGT, income tax or other levies back in the UK.

Who is affected by RSU taxes in Canada?

The country’s rules on RSU taxes apply to anyone who needs to file an income tax return.

If you’re a resident in Canada for tax purposes, you’ll be taxed on all your worldwide income. But if you’re a non-resident, you’ll only be taxed on income derived from Canada.

Use Wise to save on unnecessary currency fees on your next share or RSU payout

After reading this, you should have a better idea of how tax on RSUs works in Canada - and how the country’s tax laws apply to you.

Key takeaways to remember:

• RSUs are generally taxed when vested, not when granted - but some schemes can fall under salary deferment arrangements (SDAs) and be taxable at granting
• You’ll have to pay income tax when your RSUs are vested, and both federal and provincial/territorial taxes may apply
• You’ll have to pay capital gains tax when you sell your shares, based on 50% of your gains
• It’s crucial to get professional tax advice to understand your tax obligations and avoid double taxation, especially if you’re a UK tax resident.

It’s also important to think about the best way to manage share profits, dividends and other investment income. This is particularly crucial for those with global investments, where you’re earning returns in multiple currencies.

Wise is the ideal solution, helping you manage your money in 40+ currencies including Canadian dollars (CAD) and convert between them whenever you need to.

Thanks to its low fees* and mid-market exchange rates, you could save a bundle on currency conversion fees. For an example of how it could benefit you, check out this guide to using Wise for RSU payouts in USD.

You can even get Wise account details in Canadian dollars, so you can receive CAD payments without paying any fees.

Ready to make new global investments? It’s easy to fund your portfolio using your Wise account - which lets you securely send money worldwide in just a few clicks.

FAQs about RSU tax in Canada

Still have questions about RSU tax in Canada? Take a look below for a handful of commonly asked questions and answers that you may find useful.

How do I report an RSU on my taxes in Canada?

Once your RSUs vest, you’ll need to report the income on your tax return. It may also be the case that it is reported by your employer, who will then deduct the tax and pay it to the Canada Revenue Agency (CRA).

To understand the correct process for your circumstances, speak to your employer and/or consult a tax specialist for advice.

Are stock dividends taxable in Canada?

While there is no specific ‘dividend tax’ in Canada, you will still need to pay income tax on stock dividends under the country’s tax laws.

The rate is worked out using something called a “gross-up”. This is where dividends are added to the rest of your income at a slightly higher amount than actually received. Your total income is then taxed according to relevant federal and provincial/territorial tax rates.⁴

How to avoid double taxation on RSU in Canada?

If you live and work between two countries (i.e. the UK and Canada), there’s a risk that you end up paying tax on the same income in both jurisdictions. This is known as double taxation.

Tax can be complicated and can depend on your personal circumstances, so the best way to avoid double taxation on RSUs in Canada is to seek personalised advice from an overseas tax specialist.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates, and it is not intended as a substitute for obtaining advice from a tax advisor or any other professional.

Sources used:

Sources last checked on date: 07-Mar-2025