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Notice: The information on this page is only for users of Personal Taxprep 2018. If you are using Personal Taxprep Classic 2018, consult the help available in the program. |
The following instructions are taken from the form.
Use this form if you disposed of qualified farm or fishing property (QFFP) or qualified small business corporation shares (QSBCS) in 2018, or are reporting a reserve in 2018 from the disposition of QFFP, QSBCS, qualified farm property (QFP) or qualified fishing property (QXP). For the definitions of qualified farm or fishing property and qualified small business corporation shares, see the "Definitions" section in Guide T4037, Capital Gains.
Note
You have to be a resident of Canada throughout 2018 to be eligible to claim
the capital gains deduction. For the purpose of this deduction, we also
consider you to be a resident throughout 2018 if you were a resident of
Canada for part of 2018 and throughout 2017 or 2019.
Deferred capital gains from the disposition of QSBCS do not qualify for this deduction.
If you have investment income or investment expenses in 2018, complete Form T936, Calculation of Cumulative Net Investment Loss (CNIL) to December 31, 2018, before you complete this form. Form T936 lists what we consider to be investment income and expenses. If you are reporting a reserve claimed on your 2017 return or claiming a reserve for 2018, you also have to complete Form T2017, Summary of Reserves on Dispositions of Capital Property. To get these forms go to canada.ca/get-cra-forms or call 1-800-959-8281.
What is the capital gains deduction
limit?
If you disposed of QFFP, QSBCS, QFP or QXP, you may be eligible for the lifetime capital gains exemption (LCGE). Because you only include one half of a capital gain in your income, your cumulative capital gains deduction is one half the LCGE.
The total of your capital gains deductions on gains arising from dispositions in 2018 of qualifying capital property was increased to $424,126 (one half of an increased LCGE increased by indexation to $848,252 for 2018).
For dispositions of QFFP after April 20, 2016, the LCGE is increased to $1,000,000.
QSBCS dispositions do not qualify for this additional deduction.
- The limit on gains arising from dispositions in 2017 of qualifying capital property is $417,858 (one half of lifetine LCGE of $835,716).
- The limit on gains arising from dispositions in 2016 of qualifying capital property is $412,088 (one half of a lifetime LCGE of $824,176).
- The limit on gains arising from dispositions in 2015 of qualifying capital property is $406,800 (one half of a lifetime LCGE of $813,600).
- The limit on gains arising from dispositions in 2014 of qualifying capital property is $400,000 (one half of a lifetime LCGE of $800,000).
- The limit on gains arising from the dispositions of qualifying capital property after 2008 and before 2014 is $375,000 (one half of a lifetime LCGE of $750,000).
Deduction that can be claimed for 2018
|
Type of qualified property |
Date of disposition |
Applicable celling |
|
All types |
After 2008, but before 2014 |
$375,000 |
|
All types |
In 2014 |
$400,000 |
|
Qualified small business shares |
In 2015 |
$406,800 |
|
Qualified small business shares |
In 2016 |
$412,088 |
| Qualified small business shares | In 2017 | $417,858 |
| Qualified small business shares | In 2018 | $424,126 |
|
Qualified farm or fishing property |
In 2015, before April 21 |
$406,800 |
|
In 2015, after April 20, in 2016 and in 2017 |
$500,000 |
For more information, see the "Claiming a capital gains deduction" section in Guide T4037, Capital Gains.
Qualified farm or fishing property (QFFP), and qualified small business corporation shares (QSBCS)
When you dispose of QFFP or QSBCS and realize a capital gains deduction in 2018 that is equal to one of the following amounts, whichever is lowest:
- your annual gains limit for 2018
- your cumulative gains limit for 2018
- your net taxable capital gains reported in 2018 from dispositions of QFFP or QSBCS or if you are reporting a reserve in 2018 from the disposition of qualifying capital property
- your maximum capital gains deduction available for 2018
There is an election available to you if you own shares of a qualifying small business corporation because of one of the following reasons:
- a class of its shares is listed on a designated stock exchange
- after 1999, a class of another corporation’s shares is listed on a designated stock exchange
This election will allow you to report a taxable capital gain on your return and claim the $424,126 capital gains deduction, even though you did not actually sell your shares. The deduction applies to any gain you have on these shares to the date the shares are listed. To make this election, complete Form T2101, Election for Gains on Shares of a Corporation Becoming Public. To get this form go to canada.ca/get-cra-forms or call 1-800-959-8281.
See Also
Schedule 3 – Capital Gains or Losses