Capital gains or losses from a Partnership
A partnership does not pay tax on its capital gains or losses and it does not report them on 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 a 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 in which you could claim the capital gains reduction was the 2004 tax year. To find out the special rules for 2005 and subsequent 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, if you are reporting any of the following 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 Claiming a capital gains deduction.
Completing Schedule 3
However, if you are a member of a partnership that does not have to file a partnership information return for 2020, 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 Real estate, depreciable property, and other properties.
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 (see above).
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)
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