Capital gains and losses – farmers and fishers

You have a capital gain when you sell or are considered to have sold, a capital property for more than its adjusted cost base plus the expenses or outlays you incurred to sell the property. Not all of your capital gain is taxable. You have to include your taxable capital gain in your income.

You have a capital loss when you sell, or are considered to have sold, a non-depreciable capital property for less than its adjusted cost base plus the expenses or outlays you incurred to sell the property. Not all of your capital loss is deductible. You can only deduct an allowable capital loss from a taxable capital gain.

For more information on capital gains and losses, go to Line 127 - Capital gains. You can also see Chapter 7 of Guide T4003, Farming and Fishing Income.

Qualified farm or fishing property

If you have a taxable capital gain from the sale of qualified farm or fishing property (QFFP), you may be able to claim a capital gains deduction.

QFFP is property owned by you, your spouse or common-law partner, or by a family-farm or family-fishing partnership in which you, your spouse or common-law partner, holds an interest. QFFP includes:

  • a real property, such as land and buildings
  • a fishing vessel that was used in the course of carrying on a fishing business
  • a share of the capital stock of a family-farm or family-fishing corporation you, your spouse, or common-law partner own
  • an interest in a family-farm or family-fishing partnership you, your spouse, or common-law partner own
  • an eligible capital property used in the course of carrying on a farming or fishing business in Canada, such as:
    • milk and egg quotas for farmers
    • fishing permits or licenses with an unlimited period

Real property or eligible capital property

Real property or eligible capital property is qualified farm or fishing property only if it is used to carry on a farming or fishing business in Canada by any one of the following:

  • you, your spouse or common-law partner, or any of your parents or your children
  • a beneficiary of a personal trust, or spouse or common-law partner, parent or child of such a beneficiary
  • a family-farm or family-fishing corporation where any of the above persons owns a share of the corporation
  • a family-farm or family-fishing partnership where any of the above persons (except a family-farm or family-fishing corporation) owns an interest in the partnership

For more information on QFFP, real property, and eligible capital property, see Chapter 7 of Guide T4003, Farming and Fishing Income.

Transfer of farm or fishing property

You may be able to delay paying tax on any taxable capital gain and any recapture of capital cost allowance. You can do this when you transfer your Canadian farm or fishing property to your child, spouse, or common-law partner.

For more information on transfers of farm or fishing property, see Chapter 7 of Guide T4003, Farming and Fishing Income.

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