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 2018, if you disposed of qualified small business corporation shares (QSBCS), you may be eligible for the $848,252 LCGE. Because you only include one half of the capital gains from these properties in your taxable income, your cumulative capital gains deduction is $424,126 (1/2 of $848,252).

For dispositions of qualified farm or fishing property (QFFP) in 2016 to 2018, 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 in 2017 is $417,858 (1/2 of a lifetime LCGE of $835,716).

The capital gains deduction limit on gains arising from dispositions of QSBCS in 2016 is $412,088 (1/2 of a lifetime LCGE of $824,176).

The 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).

Note

The limit is indexed to inflation, using the Consumer Price Index data as reported by Statistics Canada.

Because the capital gains inclusion rate in 2018 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.

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