Reserve for a gift of non-qualifying securities

If you donate a non-qualifying securities (other than an excepted gift) to a qualified donee and have a capital gain, you may be able to claim a reserve in order to postpone the inclusion of the capital gain in income.

For gifts of non-qualifying securities made after December 20, 2002, the reserve you can claim cannot be greater than the eligible amount of the gift.

You can claim this reserve for any tax year ending within 60 months of the time you donated the security. However, you cannot claim a reserve if the donee disposes of the security, or if the security ceases to be a non-qualifying security before the end of the tax year. If this happens, you will be considered to have made a charitable donation in that year, and you can claim the charitable donation tax credit.

Where a qualified donee has received a gift of a non-qualifying security (other than an excepted gift), no tax receipt may be issued and therefore no charitable donation tax credit may be claimed by the donor unless, within the 60 month period, the non-qualifying security ceases to be a non-qualifying security or has been disposed of in exchange for property that is not another non-qualifying security of the donor. For dispositions of non-qualifying securities by qualified donees after March 21, 2011, the disposition must be in exchange for property that is not another non-qualifying security of any party.

If the security is not disposed of within the 60 month period, you will not be required to bring the reserve back into income in the year following the end of that period.

Completing your Form T2017

To deduct this type of reserve, you have to complete Form T2017, Summary of Reserves on Dispositions of Capital Property.

Forms and publications

• Guide T4037, Capital Gains
• Pamphlet P113, Gifts and Income Tax
• Schedule 3, Capital gains(or losses)
• Form T2017, Summary of Reserves on Dispositions of Capital Property

Related topics

• Line 349 - Donations and Gifts

Date modified:

2016-01-05