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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:
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Claiming the reserve is done on your tax return, by completing and filing Form T2017, Summary or 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:
- Capital Gains and Losses - for other methods of reducing or eliminating capital gains- Election to designate the amount of proceeds when capital property is donated
Canada Revenue Agency information:
- T4037 Capital Gains - search for Capital Gain Reserve
- IT-288R2 (Archived) Gifts of Capital Property to a Charity and Others
- Form T2017, Summary or Reserves on Dispositions of Capital Property
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!
Revised: August 07, 2018