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-> Capital gains exemption / Capital gains deduction
$750,000 Lifetime Capital Gains Exemption (LCGE) / $375,000 Lifetime Capital
Gains Deduction
There is a $750,000 lifetime capital gains exemption (LCGE), which equates
to a $375,000 lifetime capital gains deduction (1/2 of the $750,000 LCGE).
The deduction can be claimed against taxable capital gains on the disposal by
an individual of:
for dispositions occurring after May 1, 2006,
qualified fishing property
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 calculation of the deduction is done on CRA's form T657.
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
is
necessary to ensure you qualify. The following articles provide more
information:
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!
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