Exempt capital gains balance (ECGB)
When you filed Form T664 for your shares of, or interest in, a flow-through entity, the elected capital gain you reported created an ECGB for that entity.
Generally, your ECGB expired after 2004. If you did not use all of your ECGB by the end of 2004, you can add the unused balance to the adjusted cost base of your shares of, or interest in, the flow-through entity.
Andrew filed Form T664 for his 800 units in a mutual fund trust with his 1994 income tax and benefit return. He designated the fair market value of the units at the end of February 22, 1994, as his proceeds of disposition. Andrew claimed capital gains reductions of $500 in 1997 and $600 in 1998. At the end of 2003, his ECGB was $2,250. In 2004, he had a $935 capital gain from the sale of 300 units. This left him with an unused ECBG of $1,315 at the end of 2004. In future years, he can only add the unused ECGB to the cost of any remaining units.
1. ECGB carryforward to 2004
2. Capital gains flowed out
3. Capital gains from dispositions
4. Line 2 plus line 3
5. Capital gains reduction
6. Unused ECGB at the end of 2004 (line 1 minus line 5)
The unused ECGB expired after 2004 so Andrew can add this amount to the adjusted cost base of his shares of, or interest in, the flow-through entity.
For information on the sale of this kind of property, see Disposing of your shares of, or interest in, a flow-through entity.
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