Capital gains or losses from a partnership

A partnership does not pay tax on its capital gains or losses and does not report them on an income tax and benefit return. Instead, members of the partnership report their share of the partnership's capital gains or losses on their own return.

Certain partnerships may have to file a partnership information return (T5013 SUM, Summary of Partnership Income, and T5013-FIN, Partnership Financial Return) and send copies of the T5013, Statement of Partnership Income, to report amounts flowed out to their members.

Capital gains reduction (flow-through entity)

A partnership is considered a flow-through entity. The last year that you could claim the capital gains reduction in was tax year 2004. To find out the special rules for 2005 and later tax years, and more information on flow-through entities, see Flow-through entities.

Capital gains deduction

You may be eligible for the capital gains deduction for any of the following partnership-related amounts:

• a capital gain from disposing of qualified small business corporation shares
• a capital gain from disposing of qualified farm or fishing property
• farming or fishing income from the disposition of property included in capital cost allowance (CCA) Class 14.1 that is qualified farm or fishing property

For more information, see line 25400.

Completing Schedule 3

If you receive a T5013 slip, see Chart 1 to find out how to report your share of the capital gain or loss from the partnership.

However, if you are a member of a partnership that does not have to file a partnership information return for 2023, you have to report your share of any capital gain or loss from each disposition of capital property shown on the partnership financial statements in the appropriate area of Schedule 3.

For example, if the capital gain is from disposing of depreciable property, report the gain in the Real estate, depreciable property, and other properties section.

If the partnership disposed of property included in CCA Class 14.1 that is qualified farm or fishing property, part of the business income from the transaction may be a taxable capital gain. This amount qualifies for the capital gains deduction.

Forms and publications

• Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income
• RC4060, Farming Income and the AgriStability and AgriInvest Programs Guide
• RC4408, Farming Income and the AgriStability and AgriInvest Programs Harmonized Guide
• T5013, Statement of Partnership Income
• Schedule 3, Capital Gains (or Losses)

Related links

• Line 12200 – Net partnership income (limited or non-active partners only)
• Line 25400 – Capital gains deduction
• Qualified farm or fishing property (QFFP)
• Farmers and fishers