When the Strait of Hormuz closed in late February and WTI crude began its climb from the low $60s toward $100 and beyond, it created a problem that most Canadian financial planning frameworks were not calibrated for: a rapid, concentrated appreciation in energy-sector holdings against an unsettled capital gains tax environment. WTI settled around $101 on Wednesday. For clients who held Canadian energy names or commodity producers through the correction of late 2024 and early 2025, the unrealized gain in those positions is now substantial.
The planning question is not whether these clients should be doing something. It is what they should be doing, in which account type, and by when.
The Inclusion Rate Landscape
The capital gains inclusion rate increase announced in the 2024 federal budget has now survived one change in government and remains law. For individuals, the two-thirds inclusion rate applies to the portion of annual capital gains above $250,000. For corporations and trusts, the two-thirds rate applies to all capital gains from the first dollar. The one-half rate no longer applies to any corporate or trust gain, and has not since June 25, 2024.
This distinction matters enormously for the current energy-gain situation. A client who holds $500,000 in appreciated Canadian Natural Resources (CNQ.TO) shares in a personal non-registered account faces the two-thirds inclusion rate only on the gain above the $250,000 individual threshold. That same position held inside a holding company faces the two-thirds rate on the entire gain. The after-tax difference can be material.
The chart above shows the effective federal tax cost of realizing a $300,000 capital gain across the four primary account structures available to Canadian investors, at the current two-thirds inclusion rate and a marginal federal rate of 33%.
The corporate and trust structure bears the highest federal tax cost on a $300,000 capital gain at the current two-thirds inclusion rate: $66,000 in federal tax before provincial rates. The personal non-registered account benefits from the $250,000 individual threshold, reducing the federal bill to approximately $52,250 on the same gain. Source: Canada Revenue Agency.
The TFSA Angle Most Advisors Are Missing
For clients who hold appreciated energy names in non-registered accounts and have unused TFSA contribution room, the mechanics are straightforward but the execution requires care. A client who contributes appreciated shares in-kind to a TFSA triggers a deemed disposition at fair market value on the date of contribution. That deemed disposition realizes the capital gain at the current inclusion rate. After transfer, all future growth inside the TFSA is sheltered.
The question for each client is whether the tax cost of the deemed disposition today is worth the shelter on future appreciation. For clients with energy positions where the gain is large and where further appreciation is plausible (WTI remaining elevated through a prolonged Strait of Hormuz disruption is one scenario), contributing in-kind can be the correct call. But it requires knowing the adjusted cost base precisely, calculating the deemed disposition tax, and confirming that the client has adequate TFSA room. The 2026 TFSA contribution limit is $7,000, with cumulative room for eligible Canadians who have never contributed potentially exceeding $100,000.
The Corporate Account Calculus
For incorporated professionals and business owners, the analysis is more compressed. There is no $250,000 annual threshold in a corporation. The two-thirds inclusion rate applies from dollar one, and at a combined federal and provincial corporate marginal tax rate, the after-tax cost of realizing a large energy gain inside the corporation is substantially higher than realizing it personally.
This does not mean the answer is always to pay the tax now. A corporation that holds an appreciated energy position has the option of waiting for a more favourable environment, and the capital dividend account mechanism allows a portion of the gain to flow to shareholders tax-free. But with WTI above $100 and the inclusion rate debate resolved, the argument for deferral is weaker than it was in 2024 when the rate change was still uncertain. The planning window is open, but it requires a specific conversation about each client's corporate structure, existing capital dividend account balance, and expectations for the energy position going forward.