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 2022 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.

Completing your tax return

To report your capital gain or losses from the disposition of Canadian securities on the Schedule 3, see Publicly traded shares, mutual fund units, deferral of eligible small business corporation shares, and other shares.

Attach a completed Form T123, Election on Disposition of Canadian Securities, to your income tax and benefit return.

Forms and publications

• Guide T4037, Capital Gains
• Form T123, Election on Disposition of Canadian Securities
• Schedule 3, Capital Gains (or Losses)