How do I report a capital gain on my tax return using Schedule 3 in Canada?
This answer covers Canadian federal tax law, which applies in every province.
You report a capital gain on Schedule 3, and the result carries to line 12700 of your T1 return. In Part 3 of Schedule 3, you list each disposition with proceeds of disposition (column 2), ACB (column 3), outlays and expenses (column 4) and the gain or loss (column 5). A positive result goes to line 12700, and a negative result (net capital loss) does not. Only one-half of a gain is the taxable capital gain.
Report the disposition in the calendar year the sale or deemed sale occurs, in Canadian dollars, and file a return even if no tax is owing. Gains or losses shown on T3, T4PS, T5 or T5013 slips are generally reported on line 17400 or 17600 of Schedule 3. Gather your purchase and sale records first.
If you sold, or are considered to have sold, your principal residence or part of it, include Form T2091(IND) with your return and report the sale on Schedule 3. The exemption is allowed only if the sale and designation are reported on the return, and a late designation may attract a penalty. Gains on Canadian housing units owned under 365 consecutive days are business income unless a life event like death caused the sale.
Key takeaways
- Part 3 of Schedule 3 lists proceeds of disposition, ACB, outlays and expenses, and the gain or loss for each disposition.
- Report the disposition in the calendar year of the sale or deemed sale, in Canadian dollars, and file a return even if no tax is owing.
- If you sold or are considered to have sold your principal residence, include Form T2091(IND) and report the sale on Schedule 3.
- A gain on a Canadian housing unit owned for less than 365 consecutive days is deemed business income, with exceptions such as death or serious illness.