Lifetime Capital Gains Exemption, part 1

by in Tax Advice Information and Updates
Lifetime Capital Gains Exemption, part 1

An eligible individual is entitled to a cumulative lifetime capital gains exemption (LCGE) on net gains realized on the disposition of qualified property.  The LCGE also applies to reserves from these properties into income in a tax year.

The capital gains deduction can be applied against taxable capital gains included in 2015 income that arose from:

- Dispositions of qualified small business corporation shares,
- Dispositions of qualified farm or fishing property,
- Reserves brought into income in 2015, from any of the above. 

For 2015 dispositions of qualified small business corporation shares (QSBCS), the capital gains deductions limit is $406,800 or ½ of a LCGE of $813,600.

For dispositions before April 21, 2015, of qualified farm or fishing property (QFFP), the capital gains deductions limit is $406, 800 or ½ of a LCGE of $813,600.

For dispositions of QFFP after April 20, 2015, the LCGE has increased to $1,000,000.  The additional deduction is calculated as the difference between $500,000 or ½ of LCGE of $1,000,000 and the $406,800 limit. 

Please note that the additional deduction can only be used after the $406,800 is used up.  This additional deduction does not apply to dispositions of qualified small business corporation shares.  

Since the capital gains inclusion rate in 2015 is ½, only 50% of the capital gain from a disposition of property is taxable. 

In a year, you can claim any amount of the deduction you want, up to the maximum amount you calculated.

Part 2 of this blog series will focus on the definition of qualified small business corporation shares and qualified farm and fishing property so check back soon!

Need help with your capital gains exemption? Remember, you can always count on KD so contact us today!

Source:  www.cra.gc.ca

Rate this blog entry:
0
KD PROFESSIONAL is a group of interconnected companies offering a wide range of financial, accounting and tax services to individuals and businesses across Canada.

Through our experienced staff and strategic alliances, we provide exemplary service and solutions to maximize your cash flow, while preserving Wealth.

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest
Guest Saturday, 18 November 2017
Subscribe

If you have a question about one of our products or services, please do not hesitate to contact us!
Please Enter Your Name
Please Enter A Valid Email
Please Enter Your Phone Number
Please select your preferred method of contact.
Refresh Please letters shown!

KD Professional Services
Monday-Friday 9am- 5pm
102, 221 18th Street SE
Calgary, AB, T2E 6J5

403-219-0602
403-219-0603

Read our Tweets