139 – Taxable capital gains
You must report all capital gains resulting from:
- the disposition (sale, transfer, exchange, gift, etc.) of capital property in 2020;
- the realization of a capital gain in 2020 (for example, if a trust allocated a capital gain to you and gave you an RL-16 slip); or
- the deduction of a reserve in 2019.
If you disposed of capital property such as shares, virtual currency, bonds, debts, land or buildings (including a principal residence), 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.
To calculate your capital gains or losses on the disposition of capital property, complete the applicable section(s) of Schedule G. The taxable capital gains you enter in Part B or Part C of Schedule G may entitle you to a capital gains deduction on line 292.
You may not be entitled to capital gains deduction 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; or
- file your 2020 income tax return after April 30, 2022, or after June 15, 2022, if you or your spouse is reporting business income for 2020.
You can calculate your capital gains or losses on the disposition of publicly traded securities 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 report all capital gains resulting from a deemed disposition. By law, you are deemed to have disposed of capital property when certain situations occur, such as:
- the total loss of property due to damage;
- a change in use of property (for example, the conversion of your principal residence into income-generating property or vice versa);
- leaving Canada.
A deceased person is deemed to have disposed of all their property immediately before their death. As a result, the deemed disposition of the property they owned at the time could result in a capital gain. For more information on the tax effects of a person's death, see the Guide to Filing the Income Tax Return of a Deceased Person (IN-117-V).
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.
If you deduct a reserve in your 2020 return, you must include the amount of the reserve in your income for 2021. However, you may be able to deduct another reserve.
If you received financial assistance as a result of a disaster, see guide IN-125-V, The Tax Effects of Financial Assistance Received as a Result of a Disaster.
If you disposed of your principal residence in 2020, 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 taxable capital gain.
You are considered to have disposed of capital property if you:
- used virtual currency (see the definitions at line 24) as a method of payment or exchange to acquire goods or services;
- converted virtual currency to monetary currency;
- exchanged one virtual currency for another; or
- used virtual currency to make a donation.
For more information on virtual currency and cryptocurrency mining, see guide IN-120-V, Capital Gains and Losses.
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.
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 2020 and your gains were greater than your losses, you can deduct the net losses you sustained from 2013 to 2019 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 2020 on the disposition of precious property.
If you disposed of precious property in 2020 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.
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 (which you would have reported on line 166 or 167). 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|
The amount on line 96.1 represents your capital loss for the year.
If you realized a capital gain on the disposition of small business corporation shares (private corporation shares) and acquired other small business corporation shares, you can, under certain conditions, defer taxation of all or part of the gain until the new shares are disposed of.
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 2020. 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 for reducing 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, see guide IN-120-V, Capital Gains and Losses.