Line 127 - Taxable capital gains

You may have a capital gain or loss when you dispose of property, such as when you sell real estate or shares (including those in mutual funds). Generally, if the total of your gains for the year is more than the total of your losses, you have to report 50% of the difference as income. However, if the total of your losses for the year is more than the total of your gains, you cannot deduct the difference on your return for the year. See the next section “How to report.”

You may have a deemed taxable capital gain if you are electing for the special relief in respect of the gains from a disposition of eligible securities on which you elected in a previous year to defer the security option benefits. For more information, go to www.cra.gc.ca/capitalgains or see Form RC310, Election for Special Relief for Tax Deferral Election on Employee Security Options, and Guide T4037, Capital Gains.

If you have a capital gain or loss from selling or redeeming your mutual fund units or shares, get Information Sheet RC4169, Tax Treatment of Mutual Funds for Individuals, for more information.

If you realized a capital gain as a result of a mortgage foreclosure or conditional sales repossession, this gain is not included in income when we calculate your GST/HST credit, your Canada child tax benefit payments, your child disability benefit payments, the social benefits repayment (line 235), the age amount (line 301 of Schedule 1), the refundable medical expenses supplement (line 452), the working income tax benefit (WITB) (line 453), or Prince Edward Island, Nova Scotia, New Brunswick, or Newfoundland and Labrador tax reductions. If this applies to you, contact us.

When you donate capital property to a registered charity, we consider you to have disposed of the property at its fair market value. As a result, you may have to report a capital gain or loss for that property. There are special rules for donations of certain property. For more information, see Guide T4037, Capital Gains, and Pamphlet P113, Gifts and Income Tax.

For donations of publicly traded securities, the inclusion rate of zero has been extended to any capital gain realized on the exchange of shares of the capital stock of a corporation for those publicly listed securities that were donated. This treatment has certain conditions. If the exchanged securities are partnership interests, a special calculation is required to determine the capital gain to be reported. For more information about exchangeable securities, see Pamphlet P113, Gifts and Income Tax.

Donations of certain flow-through share properties may result in a deemed capital gain subject to an inclusion rate of 50%. For more information, see Pamphlet P113, Gifts and Income Tax.

How to report

Complete Schedule 3, and attach it to your paper return. Generally, if all your gains or losses are shown on T4PS, T5, or T5013 slips, report the total of amounts on line 174 of Schedule 3. If they are shown on T3 slips, report the total of amounts on line 176. Also attach these documents to your paper return. If your securities transactions are shown on an account statement or a T5008 slip, use the information on these documents to help you complete Schedule 3. For more information about these and other capital dispositions, see Guide T4037, Capital Gains.

If the result on line 199 of Schedule 3 is positive (gain), report the amount on line 127 of your return. If the result is negative (loss), do not report the amount on line 127 of your return. We will register it in our system. Keep track of this loss, which you can use to reduce your taxable capital gains of other years. The following notes explain how to do this.

Notes
You may have incurred a net capital loss in 2014 you would like to apply against taxable capital gains you reported on your 2011, 2012, or 2013 return. For more information, and to carry back the loss, get Form T1A, Request for Loss Carryback, and Guide T4037, Capital Gains. Attach a completed Form T1A to your paper return (or send one to us separately). Do not file an amended return for the year or years to which you apply the loss.

If you are preparing a return for a person who died in 2014, see Guide T4011, Preparing Returns for Deceased Persons, for more information about special rules that apply to claiming these losses.