Gifts of publicly traded shares and stock options

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 (for example, government savings bond)
  • 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 a qualified donee other than a private foundation
  • a share, debt obligation, or right [for example, security (stock) option] 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 Pamphlet P113, Gifts and Income Tax.

If you did not receive an advantage in respect of the gift, the full amount of the capital gain is eligible for the inclusion rate of zero. If, however, you received or are entitled to an advantage, only a portion of the capital gain is eligible for the inclusion rate of zero. The remainder is subject to an inclusion rate of 50%.

Generally, for a disposition of a property resulting from its donation to a qualified donee that is at that particular time a property 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 discussed above, you may be deemed to have a capital gain calculated as if another capital property was disposed of upon the donation of the flow-through share. For more information, see Pamphlet P113.

The amount eligible for the inclusion rate of zero is calculated using the following formula:

A x (B ÷ C)
A = the capital gain
B = the eligible amount of the gift
C = the proceeds of disposition

To qualify for this tax treatment, you must meet certain conditions. For more information, see Pamphlet P113.

Completing your T1170 and Schedule 3

On Form T1170, Capital Gains on Gifts of Certain Capital Property, report the total of all amounts subject to the 50% and zero inclusion rate (see Note below for exception) on line 68230 or on line 68250, depending on the type of property.

On line 13200 or line 15300 of Schedule 3, Capital Gains (or Losses), report the applicable amounts calculated on Form T1170.


The capital gain realized on an exchange of partnership interests for publicly listed securities that are then donated should not be reported on Form T1170. Instead, the gain should be reported directly on line 17400 of Schedule 3.

Attach a completed Form T1170 to your return.
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