The maximum LCGE that can be
claimed by any individual was increased from $500,000
to $750,000, effective March 19, 2007, as a result of the
2007 Federal budget. This includes exemptions for small business corporation shares, farm
property, fishing property, and any capital gains exemptions used in
1994 or earlier. The capital gain is reported in Part 1 on Schedule 3 of the
personal income tax return. The calculation of the deduction is done on form T657.
Federal Budget proposes to increase the LCGE amount to $800,000 for the
2014 tax year, and index the LCGE to inflation for tax years after 2014. The
new limit will be applicable to qualified property of all individuals,
even if the LCGE has been previously claimed.
The rules relating to the capital gains exemption are
complex, and professional advice should be obtained for
anyone who is hoping to take advantage of this deduction. Long term planning
necessary to ensure you qualify. The following articles provide more
Cumulative net investment loss
When the capital gains deduction is calculated, it is
reduced by the taxpayer's CNIL balance. The CNIL
balance is the amount by which the total of all investment
expenses exceeds the total of all investment income for all
tax years after 1987. The CNIL can be calculated by
filling in CRA's form T936
for each year after 1987.
Tax Tip: This is
complicated and can save more than $100,000 in taxes - do it
right and get professional advice!
Revised: January 23, 2014