Calculating your capital gain or loss
To calculate any capital gain or loss, you need to know the following three amounts:
- the proceeds of disposition
- the adjusted cost base (ACB)
- the outlays and expenses incurred to sell your property
To calculate your capital gain or loss, subtract the total of your property's ACB, and any outlays and expenses incurred to sell your property, from the proceeds of disposition.
Note
When calculating the capital gain or loss on the sale of capital property that was made in a foreign currency:
- convert the proceeds of disposition to Canadian dollars using the exchange rate in effect at the time of the sale
- convert the ACB of the property to Canadian dollars using the exchange rate in effect at the time the property was acquired
- convert the outlays and expenses to Canadian dollars using the exchange rate in effect at the time they were incurred
You have a capital gain when you sell, or are considered to have sold, a capital property for more than the total of its ACB and the outlays and expenses incurred to sell the property.
Example
In 2023, Mario sold 400 shares of XYZ Public Corporation of Canada for $6,500. He received the full amount of the proceeds of dispostion at the time of the sale and paid a commission of $60. The adjusted cost base of the shares is $4,000. Mario calculates his capital gain as follows:
Proceeds of disposition
$6,500 - ($4,000 + $60) = $2,440
Because only half (inclusion rate of 1/2) of the capital gain is taxable, Mario completes Schedule 3 and reports $1,220 as his taxable capital gain at line 12700 on his income tax and benefit return.
When you sell, or are considered to have sold, a capital property for less than its ACB plus the outlays and expenses incurred to sell the property, you have a capital loss. You can apply 1/2 of your capital losses against any taxable capital gains in the year. For more information on capital losses, see Capital losses and deductions.
You may be entitled to an inclusion rate of zero on any capital gain resulting from the donation of any of the following properties to a qualified donee:
- a share of the capital stock of a mutual fund corporation
- a unit of a mutual fund trust
- an interest in a related segregated fund trust
- a prescribed debt obligation that is not a linked note
- ecologically sensitive land including a covenant, an easement, or in the case of land in Quebec, a personal servitude (when certain conditions are met), or a real servitude donated to certain qualified donees other than a private foundation
- a share, debt obligation, or right listed on a designated stock exchange
For donations of publicly traded securities, the inclusion rate of zero also applies to any capital gain realized on the exchange of shares of the capital stock of a corporation for those publicly listed securities donated. This treatment is subject to certain conditions. In cases where the exchanged securities are partnership interests, a special calculation is required to determine the capital gain to be reported. For more information on exchangeable securities, see Guide P113, Gifts and Income Tax.
Generally, if you donate property to a qualified donee that is, at the time of the donation, included in a flow-through share class of property, in addition to any capital gain that would otherwise be subject to the zero inclusion rate, you may be deemed to have a capital gain from the disposition of another capital property. For more information including the calculation of the capital gain, see Guide P113, Gifts and Income Tax.
If you donated any of these properties, use Form T1170, Capital Gains on Gifts of Certain Capital Property, to calculate the capital gain to report on Schedule 3.
Even though, in most cases, the inclusion rate of 1/2 is reduced to zero for gifts of these properties, Form T1170 should still be completed to report these gifts.
However, in all cases, if you received an advantage in respect of the gift, part of the capital gain on the gifted property will be subject to the 1/2 inclusion rate. In addition, the inclusion rate of zero does not apply to capital losses you may have from such donations. For more information, see Capital Gains realized on gifts of certain capital property.
Note
Before 1972, capital gains were not taxed. Therefore, if you sold capital property in 2023 that you owned before 1972, you have to apply special rules when you calculate your capital gain or loss to remove any capital gains accrued before 1972. To calculate your gain or loss from selling property you owned before 1972, use Form T1105, Supplementary Schedule for Dispositions of Capital Property Acquired Before 1972.
Completing your tax return
Use Schedule 3, Capital Gains (or Losses), to calculate and report all your capital gains and losses. Do not include any capital gains or losses in your business or property income, even if you used the property for your business. For more information, see Completing Schedule 3.
If you donated certain properties to a qualified donee, you will also have to complete Form T1170, Capital Gains on Gifts of Certain Capital Property.
Forms and publications
Page details
- Date modified: