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Capital Gain Reserve

Income Tax Act s. 40(1)(a)(iii), 40(1.1), 40(2)(a)

When you sell any type of property that results in a capital gain, it may be possible to spread the gain over a number of years.  This is done by claiming a capital gain reserve.

The reserve cannot be claimed in a tax year if you:

Claiming the reserve is done on your tax return, by completing and filing Form T2017, Summary of Reserves on Dispositions of Capital Property.

There are three different categories for the capital gain reserve:

Dispositions to your child of family farm property, family fishing property after May 1, 2006, and small business corporation shares

All other property except donated non-qualifying securities

Gifts of non-qualifying securities (other than an excepted gift) to a qualified donee

See also:

Tax Tip:  The capital gain reserve is a good tool for deferral, and sometimes elimination, of capital gains.  See your tax professional, and do some advance planning!