In Canada, the sale of goodwill is generally taxed as a capital gain, with a portion of the proceeds recognized as income. As of 2017, goodwill is treated as Class 14.1 property, where 100% of the gain is typically included in income, but it may be offset by cumulative eligible capital (CEC) pools or reduced by the lifetime capital gains exemption if applicable.
The customer lists, patents, and goodwill are intangibles. Accordingly, the portion of the purchase price reasonably attributable to these items is not subject to tax.
Shop local, support Canadian, and save more because Goodwill is tax-free,* and always will be! *All donated goods are 100% tax-free! New goods marked with blue price tags and paper bags available for purchase are subject to applicable taxes.
Selling your own used personal items is not taxable in Canada unless you are running a business or flipping for profit consistently. If you bought things for personal use and sold them for less, there is no tax and nothing to report.
Entity-owned goodwill is reported on Form 4797. If personal goodwill exists, the seller may report it directly on Form 8949, Sales and Other Dispositions of Capital Assets, which flows to Schedule D (Form 1040), Capital Gains and Losses.
Taxes and Your Donations
When you drop off your donations at Goodwill, you'll receive a receipt from a donation attendant. Hang on to this receipt. At the end of the year, if you itemize deductions on your taxes, you can claim a tax deduction for clothing and household items that are in good condition.
Canada's 90% rule helps non-residents and recent immigrants claim full federal tax credits (like the Basic Personal Amount) if 90% or more of their net worldwide income for the relevant tax year is from Canadian sources; otherwise, credits are prorated (reduced) based on their Canadian residency period, ensuring fairness for those who weren't residents all year.
Zero-rated supplies
You may still have to pay duties and taxes on second-hand goods – however, if the goods are classified as antiques or original pieces of art, you could benefit from reduced VAT depending on the national regulations and if your goods meet the correct criteria.
Is goodwill taxable in Canada? Goodwill is a capital asset with special tax treatment. While not amortized for accounting, goodwill can be amortized for tax purposes when purchased, and gains on its sale are subject to capital gains tax.
If you are responsible for the support of family members other than a spouse or your minor children, you may have overlooked the following eligible credits:
Whilst depreciation of goodwill is no longer tax-deductible, the tax goodwill balance is tax-deductible when the underlying business is sold on a slump sale basis – except where goodwill has not been acquired by purchase from previous owner.
The key is to initially recognise the amount payable at present value in goodwill and as a corresponding liability on the CSFP. As time elapses, the discount on the liability must be 'unwound' as the settlement date approaches.
It allowed sellers to claim CGT exemption for the final 36 months of ownership, even if they had moved out. However, this was reduced to 18 months in 2014 and further to 9 months in 2020, which remains the rule today. This general law is in place as it prevents short-term transaction benefits concerning taxation.
While the goodwill is recognized for accounting purposes, it cannot be amortized for tax purposes, resulting in no tax deductions over the life of the asset. In an asset purchase transaction, however, the tax treatment can be far more advantageous.
Lottery and prize winnings: Money won from lotteries, game shows, radio contests, bingo, casinos, or most other prize winnings aren't taxable in Canada. However, if they were earned as a business activity, they would be. Casino winnings from abroad: Canada doesn't tax winnings regardless of where they're won.
The new basic personal amount
Canadians earning $16,452 or less in 2026 will owe no federal income tax. For those with incomes above that threshold, federal income taxes are reduced by an amount equal to the basic personal amount multiplied by the lowest federal income tax rate.
For a $70,000 income in Canada (using 2025 rates), you'll pay roughly $13,000 to $20,000 in total taxes (federal, provincial, CPP, EI), depending on your province, resulting in a take-home pay around $50,000-$59,000, with federal tax around 14.5% or 20.5% depending on the portion, plus provincial tax and deductions like CPP and EI.
The 30% rule restricts Canadian pension funds from investing in securities of a corporation that carry more than 30% of the votes that may be cast to elect directors of the corporation (subject to certain limited exceptions).
Canadians travelling extensively, living or working abroad may still have to pay Canadian and provincial or territorial income taxes.
The five key mistakes to avoid in a TFSA are over-contributing (and re-depositing withdrawals in the same year), treating it like a basic savings account (missing out on investment growth), failing to track your room (relying solely on CRA data), improperly moving funds (withdrawing and redepositing instead of transferring), and investing in non-qualified assets or high-risk trades (like day trading or certain foreign stocks that incur withholding tax).
Key Takeaways. Goodwill is taxable because it represents intangible assets—such as reputation and customer relationships—that increase a company's value.
The general rule is that no tax relief is available for the purchase of goodwill or other intangibles (since it is a capital asset). However, in some specific cases, tax relief is available for the accounts amortisation of goodwill or a statutory write-off of the goodwill.
For the 2025 tax year, you can generally deduct up to 60% of your adjusted gross income (AGI) for cash donations and up to 50% for noncash donations. To claim these deductions, you must fill out Schedule A and keep proper records, especially for donations over $250.