🇨🇦 Canada · 5 min read · Published 2026-09-07 · Updated 2026-09-07

Written by Jordan Reeves · Editorial review: automated source and figure checks (how we check this)

Sources last verified: 2026-09-07

How Are RSUs Taxed in Canada?

As employment income at vesting, at your full marginal rate. Unlike stock options, restricted share units carry no deduction, so the entire value of the shares delivered is taxed as salary in the year they vest.

60-SECOND ANSWER

RSUs are taxed as employment income at full rates when they vest, with no equivalent of the stock option deduction.

The answer:: The fair market value of the shares on the vesting date is employment income in that year, taxed at your marginal rate.
The trap:: Relying on the shares withheld for tax. Employers often withhold at a rate below a high earner's actual marginal rate.
The recommendation:: Set the vesting-date value as your cost base and check it against your broker's figure, because the two frequently disagree.

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Where the AI summary above gets this wrong

"Restricted share units are taxed like stock options."

That's surface-true. Here's what it misses:

There is no deduction — The stock option deduction does not apply to RSUs, so the full value at vesting is taxed as ordinary employment income.
Withholding is often insufficient — Employers commonly withhold at a standard rate, which can be well below the marginal rate of a higher earner.
The cost base is the vesting value — Shares retained after vesting have a cost base equal to the value already taxed, and brokers frequently record it incorrectly.

→ See what a vesting year costs at your rate

01 What happens at vesting

When restricted share units vest, the fair market value of the shares delivered is included in employment income for that year. There is no election to defer and no deduction equivalent to the one available on qualifying stock options.

That makes RSUs simpler and more expensive than options: simpler because there is nothing to decide, more expensive because the whole amount is taxed at full rates rather than half of it.

Source: Capital gains (line 12700)

02 Why the withholding falls short

Employers usually satisfy the withholding obligation by selling or withholding a portion of the vesting shares. The rate applied is frequently a standard supplemental rate rather than the employee's actual marginal rate.

For a high earner whose marginal rate exceeds that, the difference is payable at filing. Where vesting is large and annual, the shortfall can also trigger a requirement to pay quarterly instalments — the test is in quarterly tax instalments.

WORKED EXAMPLE · Try the numbers

Shows: what a given amount of additional taxable income costs you in tax at your marginal rate, and what you keep. Ignores: provincial surtaxes, credits that phase out with income, and any effect on income-tested benefits.

Amount ($)

Your marginal rate (%)

What you keep after tax

$6,700

At a 33% marginal rate, $10,000 costs $3,300 in tax and leaves $6,700.

Source: Capital gains (line 12700)

03 The cost base error to check

Shares kept after vesting have an adjusted cost base equal to the value already taxed as employment income. Selling later produces a capital gain or loss measured from that figure, not from zero.

Brokerage records frequently show a cost base of nil or the wrong amount for shares received through a plan, which leads directly to double taxation on sale. Keeping your own record from the vesting statement is the fix — the wider obligation is in tracking adjusted cost base.

Selling the shares immediately on vesting removes the problem entirely, because the cost base equals the sale price and no capital gain or loss arises. Holding is a separate investment decision about concentrating in one employer's stock, and treating it as one rather than as inertia is what most vesting schedules quietly discourage.

Source: Canadian income tax rates for individuals

The nil cost base on a brokerage statement is the quiet disaster here. The employment income was taxed at vesting, the broker records nothing, and the employee pays capital gains tax on the same money a second time unless they kept the vesting statement.