Calculating and reporting your capital gains and losses
This page provides general information to help you calculate and report a capital gain or loss.
Determining if you have a capital gain or loss
Usually, you have a capital gain or capital loss when you sell or dispose of capital property , or are considered to have sold capital property.
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Examples of where you are considered to have sold capital property
The following are examples of cases where you are considered to have sold capital property:
- You exchange one property for another
- You give property (other than cash) as a gift
- Shares or other securities in your name are converted
- You settle or cancel a debt owed to you
- You transfer certain property to a trust
- Your property is expropriated
- Your property is stolen
- Your property is destroyed
- An option that you hold to buy or sell property expires
- A corporation redeems or cancels shares or other securities that you hold (you will usually be considered to have received a dividend, the amount of which will be shown on a T5 slip)
- You change all or part of the property's use
- You leave Canada (see Dispositions of property for emigrants of Canada)
- The owner of the capital property dies (see Prepare tax returns for someone who died – Taxable capital gains on property, investments, and belongings)
Also, depending on your own situation, you may or may not have a capital gain or loss when you dispose of Canadian securities or a personal-use property:
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Disposing of Canadian securities
If you dispose of Canadian securities, it's possible that you could have a gain or loss on income account (as opposed to the more likely capital gain or loss). However, in the year you dispose of Canadian securities, you can elect to report such a gain or loss as a capital gain or loss. If you make this election for a tax year, the CRA will consider every Canadian security you owned in that year and later years to be capital properties. A trader or dealer in securities (other than a mutual fund trust or a mutual fund corporation) or anyone who was a non-resident of Canada when the security was sold cannot make this election.
If a partnership owns Canadian securities, each partner is treated as owning the security. When the partnership disposes of the security, each partner can elect to treat the security as capital property. An election by one partner will not result in each partner being treated as having made the election.
To make this election, complete Form T123, Election on Disposition of Canadian Securities, and attach it to your 2024 income tax and benefit return. Once you make this election, you cannot reverse your decision.
For more information on this election as well as what constitutes a gain on income account versus a capital gain, see Archived Interpretation Bulletin IT-479R, Transactions in Securities, and its Special Release.
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Disposing of personal-use property
Many people are not affected by the capital gains rules because the property they own is for their personal use or enjoyment, and the disposition of such property generally does not result in taxable income.
To find out if you have a capital gain (or loss) when you dispose of property you use for personal use, see Personal-use property or Principal residence.
You may also have a capital gain or loss if you are considered to have disposed of property (see the definition of deemed disposition ).
When to report a capital gain or loss
Report the disposition of capital property in the calendar year (January to December) you sell, or are considered to have sold, the property.
Regardless of whether or not the sale of a capital property results in a capital gain or loss, you have to file an income tax and benefit return to report the transaction (even if you do not have to pay tax). This rule also applies when you report the taxable part of any capital gains reserve you deducted in 2023.
Business owner
If you own a business that has a fiscal year end other than December 31, you still report the sale of a capital property in the calendar year the sale takes place.
Example
You own a small business. The fiscal year end for your business is June 30, 2024. In August 2024, you sold a capital property that you used in your business. As a result of the sale, you had a capital gain. You must report the capital gain on your income tax and benefit return for 2024. You do this even though the sale took place after your business's fiscal year end date of June 30.
Member of a partnership
If you are a member of a partnership, it is possible that your partnership has a fiscal year end other than December 31. If the partnership sells capital property during its fiscal year, you generally report your share of any capital gain or loss in the calendar year in which that fiscal year ends.
For more information on capital gains and losses, when you are a member of a partnership, see Capital gains or losses from a Partnership.
How to calculate 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.
Notes
When calculating the capital gain or loss on the sale of capital property that was made in a foreign currency, you must convert:
- the proceeds of disposition to Canadian dollars using the exchange rate in effect at the time of the sale
- the ACB of the property to Canadian dollars using the exchange rate in effect at the time the property was acquired
- the outlays and expenses to Canadian dollars using the exchange rate in effect at the time they were incurred
Also, in some cases, special rules may apply that will allow you to consider the cost of a property to be an amount other than its actual cost.
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
On March 13, 2024, you sold 400 shares of XYZ Public Corporation of Canada for $6,500. You received the full amount of the proceeds of disposition at the time of the sale and paid a commission of $60. The ACB of the shares is $4,000. You calculate your capital gain as follows:
For example:
This means that 50% of the capital gain would be taxable and you would report $1,220 as your taxable capital gain on line 12700 of your 2024 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. 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 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 2024 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.
What happens if you have a capital gain or loss
If you have a capital gain
If you have a capital gain, you may be able to do one of the following:
- defer part of the capital gain by claiming a capital reserve
- reduce or offset all or a part of the gain by claiming a capital gains deduction
If you have a capital loss
If you have a capital loss in 2024, you can use it to reduce any capital gains you had in the year, to a balance of zero. If your capital losses are more than your capital gains, you may have a net capital loss for the year.
Generally, you can apply your net capital losses to taxable capital gains of the 3 preceding years and to any future years. For more information, see Capital losses and deductions.
How to complete your tax return
You have to complete Schedule 3, Capital gain or losses, to determine your taxable capital gains or your net capital loss.
Line 19900 of Schedule 3 will indicate whether you have a taxable capital gain or a net capital loss:
- If the amount is positive, enter your taxable capital gains on line 12700 of your return.
- If the amount is negative (net capital loss), do not report it on line 12700 of your 2024 return. Your net capital loss, if any, will appear on your 2024 notice of assessment or reassessment. You can use it to reduce your taxable capital gain in any of the 3 preceding years or any future year.
Report your net gains or losses in Canadian dollars. Use the exchange rate that was in effect on the day of the transaction or, if there were transactions at various times throughout the year, use the Exchange Rate or Annual Average Exchange Rate.
If you need detailed information on how to report your capital gains or losses, such as the different types of property, see Completing Schedule 3.
What records you have to keep
You will need information from your records or supporting documents to calculate your capital gains or capital losses for the year. You do not need to include these documents with your income tax and benefit return as proof of any sale or purchase of capital property. However, it is important that you keep these documents in case the CRA asks to see them later.
If you own qualified farm or fishing property (QFFP) or qualified small business corporation shares , you should also keep a record of your investment income and expenses in case you decide to claim a capital gains deduction in the year of sale.
You will need these amounts to calculate the cumulative net investment loss (CNIL) component of the capital gains deduction. You can use Form T936, Calculation of Cumulative Net Investment Loss (CNIL) to December 31, 2024, for this purpose.
In addition, you should keep a record of the fair market value of the property on the date you:
- inherit it
- receive it as a gift
- change its use