Bonds, debentures, promissory notes, and other similar properties

Use this section of Schedule 3 to report capital gains or capital losses from the disposition of bonds, debentures, Treasury bills, promissory notes, interests in flow-through entities, bad debts, foreign currencies, and options, as well as discounts, premiums, and bonuses on debt obligations.

Note

A capital gain or loss cannot arise from Canada Savings Bonds or similar provincial savings bonds. For more information on the tax treatment of these bonds, see Line 121- Interest and other investment income.

Capital gains arising from donations made to a qualified donee of a debt obligation or right (for example, stock option) listed on a designated stock exchange, or a prescribed debt obligation, are treated differently. If you made such a donation, use Form T1170, Capital Gains on Gifts of Certain Capital Property. If you have a capital gain, report on Schedule 3 the amount calculated on Form T1170. For more information, see Pamphlet P113, Gifts and Income Tax

If you sold any of the types of properties listed above in 2018, you will receive a T5008 slip, Statement of Securities Transactions, or an account statement.

A linked note is a debt obligation, most often issued by a financial institution, the return on which is linked in some manner to the performance of one or more underlying assets or indexes over the term of the obligation. For transfers of debt obligations (as described in paragraph 7000(1)(d) of the Income Tax Regulations) that occur after 2016, a new deeming rule treats any gain, realized at the time of the assignment or transfer of a linked note, as interest that accrued on the debt obligation for a period commencing before the time of the transfer and ending at the time of the transfer.

If you sold a linked note in 2018, you will receive a T5008 slip and a T5 slip, Statement of Investment Income. Box 30 - Equity linked notes interest, of your T5 slip contains the amount of interest income you have to report on line 121 of your income tax and benefit return. The T5008 slip contains information to help you calculate a capital gain (or loss), if any. The box on the T5008 slip called “Proceeds of disposition or settlement amount” does not contain any interest income that is already reported on your T5 slip. For instructions on how to calculate your capital gain (or loss), see How do you calculate your capital gain or loss?

If you have bought and sold the same type of property over a period of time, a special rule may affect your capital gain (or loss) calculation. For more information, see Identical properties

Completing your Schedule 3

Report dispositions on lines 151 and 153 of Schedule 3.

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