What is the deduction limit?

An eligible individual is entitled to a cumulative lifetime capital gains exemption (LCGE) on net gains realized on the disposition of qualified property. This exemption also applies to reserves from these properties brought into income in a tax year.

For 2016, if you disposed of qualified small business corporation shares (QSBCS), you may be eligible for the $824,176 LCGE. Because you only include one half of the capital gains from these properties in your taxable income, your cumulative capital gains deduction is $412,088 (1/2 of $824,176).

For dispositions of qualified farm or fishing property (QFFP) in 2016, the LCGE is $1,000,000. Because you only include one half of the capital gains from these properties in your taxable income, your cumulative capital gains deduction is $500,000 (1/2 of $1,000,000).

The capital gains deduction limit on gains arising from dispositions of QSBCS and QFFP in 2015 is $406,800 (1/2 of a lifetime LCGE of $813,600). For dispositions of QFFP after April 20, 2015, the LCGE is $1,000,000. The additional deduction is calculated as the difference between $500,000 (1/2 of $1,000,000) and the $406,800 limit.

The limit on gains arising from dispositions of QSBCS and QFFP in 2014 is $400,000 (1/2 of a lifetime LCGE of $800,000).

The limit on gains arising from dispositions of qualified farm property, qualified fishing property or QSBCS after March 18, 2007, and before 2014 is $375,000 (1/2 of a LCGE of $750,000).

The limit on gains arising from these dispositions from 1985 to March 18, 2007 is $250,000 (1/2 of a LCGE of $500,000).

Because the capital gains inclusion rate in 2016 is 1/2, only 50% of the capital gain from a disposition of property is taxable.

In a year, you can claim any amount of the deduction you want, up to the maximum allowable amount you calculated.

Forms and publications

• Form T657, Calculation of Capital Gains Deduction for 2016
• Form T936, Calculation of Cumulative Net Investment Loss (CNIL) to December 31, 2016

Related topics

• Line 127 - Capital gains
• Qualified farm and fishing property
• Qualified small business corporation shares

Date modified:

2017-01-03