292 – Capital gains deduction

If you are reporting a taxable capital gain (This link will open a new window) on line 139, you may be entitled to a capital gains deduction if you meet both of the following conditions:

• You realized the gain when you disposed of qualified farm property, qualified fishing property, qualified small business corporation shares or certain resource property.
• You were resident in Canada throughout 2011, or you were resident in Canada at some time in 2011 and were also resident in Canada throughout 2010 or expect to be resident in Canada throughout 2012.

To calculate your deduction, complete form TP-726.7-V, Capital Gains Deduction on Qualified Property.

Your cumulative net investment loss (CNIL) on December 31, 2011, may reduce your capital gains deduction. Your CNIL is equal to the investment expenses you incurred after 1987, minus the investment income you earned after 1987. To calculate your CNIL, complete form TP-726.6-V, Cumulative Net Investment Loss.

Disposition of certain resource property

If you realized a capital gain when you disposed of certain resource property acquired after May 14, 1992 (for example, a flow-through share, or an interest in a partnership that invested in flow-through shares or incurred resource expenses after May 14, 1992), you may be entitled to a capital gains deduction. To find out if you can claim a deduction and to calculate the amount of your deduction, complete form TP-726.20.2-V, Capital Gains Deduction on Resource Property.

Disposition of incorporeal capital property

If you have not reached the capital gains deduction limit and are reporting, on line 23 or 24 of Schedule L, a gain realized on the disposition of incorporeal capital property that was qualified farm property or qualified fishing property, enter on line 86 of Schedule G the amount of the gain realized on the eligible incorporeal capital amount. Do not include the recovery of annual deductions claimed for previous years. Also complete form TP-726.7-V, Capital Gains Deduction on Qualified Property.

For more information on the capital gains deduction, consult the brochure Capital Gains and Losses (IN-120-V).