139 – Taxable capital gains

If you disposed of capital property (for example, if you sold, transferred, gave or bequeathed shares, bonds, debts, land or buildings), you may have to include a portion of the gain realized in your income. If your gains are greater than your losses, 50% of the excess must be entered on line 139 as a taxable capital gain.

However, if your losses are greater than your gains, 50% of the excess constitutes a net capital loss. You cannot enter a loss on line 139, but you can use it to reduce your taxable capital gains for other years. For more information, see Net capital loss below.

Your capital gains or losses on the disposition (sale, transfer, gift, bequest, etc) of publicly traded securities can be calculated using the information on your RL-18 slip (or your T5008 slip, if you did not receive an RL-18 slip) or on the statement of account or transaction record received from a stockbroker or an institution.

You must file a 2018 income tax return if, in 2018, you disposed of capital property or realized a capital gain (for example, if a trust allocated a capital gain to you) or if you are required to report a capital gain with regard to a 2017 reserve.

If you fail to report a capital gain realized on the disposition of qualified farm or fishing property, qualified small business corporation shares or certain resource property, you may lose your entitlement to the capital gains deduction (line 292). The same is true if you file your 2018 income tax return after April 30, 2020 (or after June 15, 2020, if you or your spouse is reporting business income for 2018).

To calculate your capital gains or losses on the disposition of capital property, complete Part A of Schedule G. If you disposed of resource property, complete Part B. If you disposed of qualified farm or fishing property, or qualified small business corporation shares, complete Part C. The capital gains you enter in Part B or Part C of Schedule G may entitle you to a capital gains deduction. For more information, see the instructions for line 292.

Reserve for a capital gain

If you disposed of capital property and part of the proceeds of disposition may be paid after the end of the year, you can, as a rule, deduct a reserve for the capital gain realized on the disposition. The amount you can deduct as a reserve generally depends on the amount you deduct as a reserve in your federal income tax return.

However, if the reserve is attributable to the amount you designated as a deemed capital gain for 2018 or a previous year on the disposition of eligible shares in a corporation as part of the transfer of a family business, you can disregard the limit mentioned in the federal income tax return.

Important

If you deduct a reserve in your 2018 return, you must include the amount of the reserve in your income for 2019. However, you may be able to deduct another reserve.

For more information, consult the guide entitled Capital Gains and Losses (IN-120-V).

Financial assistance received as a result of a disaster

If you received financial assistance as a result of a disaster, consult the guide The Tax Effects of Financial Assistance Received as a Result of a Disaster (IN-125-V).

Disposition of a principal residence

If you disposed of your principal residence in 2018, you must complete form TP-274-V, Designation of Property as a Principal Residence. You will thereby avoid having all or part of any profit considered a capital gain.

Disposition of personal-use property (line 16 of Schedule G)

If you realized a capital gain on the disposition of personal-use property, you are required to report it only if the proceeds of disposition are more than $1,000. In this case, you must enter an adjusted cost base of $1,000 or the actual adjusted cost base, whichever is greater.

A loss sustained on the disposition of personal-use property cannot be deducted.

Disposition of precious property (lines 18 and 19 of Schedule G)

If you realized a capital gain on the disposition of precious property, you are required to report it only if the proceeds of disposition are more than $1,000. In this case, you must enter an adjusted cost base of $1,000 or the actual adjusted cost base, whichever is greater.

If you disposed of precious property in 2018 and your gains were greater than your losses, you can deduct the net losses you sustained from 2011 to 2017 on the property, provided you have not previously deducted them. The amount you deduct must not be greater than the net gain you realized in 2018 on the disposition of precious property.

If you disposed of precious property in 2018 and your losses were greater than your gains, you cannot deduct the losses from the gains you realized on the disposition of other types of property. However, you can deduct them from the gains you reported on the disposition of precious property in the previous three years. To do so, complete form TP-1012.A-V, Carry-Back of a Loss, and file it separately from your return.

Disposition of eligible shares in a corporation as part of the transfer of a family business (lines 55.1 and 96.1, box 55 of Schedule G)

If you disposed of (sold or transferred) shares in a family farm or fishing corporation or qualified small business corporation shares as part of the transfer of a family business, you may be able to treat the resulting gain as a deemed capital gain instead of as a deemed dividend. However, you must be claiming a capital gains deduction on line 292 in respect of the deemed capital gain for the year you disposed of the shares.

Line 55.1 of Schedule G

To calculate the amount of the deemed capital gain to enter on line 55.1, complete form TP-517.5.5-V, Designating a Deemed Capital Gain Further to the Transfer of a Family Business.

Line 96.1 of Schedule G

If you entered an amount on line 55.1 of Schedule G, refer to the table below to find out what to enter on line 96.1.

Amount on line 96 Amount to enter on line 96.1
Positive amount ≥ line 55.1 0
Positive amount < line 55.1 Line 55.1 minus line 96
0 Line 55.1 minus line 96
Negative amount Line 55.1 plus line 96 (without the minus sign [–])

The amount on line 96.1 represents your capital loss for the year.

For more information, see the guide entitled Capital Gains and Losses (IN-120-V).

If you do not meet all the requirements for this deduction, the gain on the disposition of the shares is considered a deemed dividend, and you must include it in the actual amount of dividends on line 166 or 167.

Deferral of capital gains realized on a disposition of small business corporation shares (line 94 of Schedule G)

If you realized a capital gain on the disposition of small business corporation shares (private corporation shares) and acquired other small business corporation shares (replacement shares), you can, under certain conditions, defer taxation of all or part of the gain until the new shares are disposed of.

For more information, consult the guide entitled Capital Gains and Losses (IN-120-V).

Net capital loss

If the result obtained on line 98 of Schedule G is negative (that is, if your allowable capital losses are greater than your taxable capital gains), this amount constitutes a net capital loss. You cannot deduct this net capital loss in 2018. Be sure to enclose Schedule G with your return so we can update your file. You can use your loss to reduce your taxable capital gains for the three previous years or for future years. If you wish to use a loss to reduce your taxable capital gains for previous years, complete form TP-1012.A-V, Carry-Back of a Loss, and file it separately from your return. The rules under which you can reduce your taxable capital gains for future years are explained in the instructions for line 290.

If you disposed of eligible shares in a corporation as part of the transfer of a family business, the amount of the net capital loss you can carry over corresponds to 50% of the amount on line 96.1 of Schedule G.

For more information about capital gains and losses, consult the guide entitled Capital Gains and Losses (IN-120-V).

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