T657: Calculation of Capital Gains Deduction

What’s in this article?

 

What is this?

Form T657 is used to calculate the capital gains deduction on gains from disposition of qualified property such as:

  • Qualified farm property;
  • Qualified small business corporation shares; or
  • Qualified fishing property after May 1, 2006.

When you dispose of qualified property, you can claim a capital gains deduction that is the lowest of the following amounts:

  • Your annual gains limit for the year;
  • Your cumulative gains limit for the year;
  • Your net taxable capital gains reported in the year from dispositions of qualified farm or fishing property and qualified small business corporation shares disposed of after May 1, 2006; and
  • Your maximum capital gains deduction available for the year.

If you dispose of any of the above qualified properties, you are entitled to a Lifetime Capital Gains Exemption (LCGE) on $813,600 of net gains. The maximum capital gains deduction is half that amount.

The deduction amount on form T657 is transferred to line 254 of your tax return.

If you are a resident of Québec, complete form TP-726.7-V: Capital Gains Deduction on Qualified Property to calculate your capital gains deduction and claim it on line 292 of your tax return.

 

Am I eligible?

To claim the capital gains deduction, you must have disposed of a qualified property and be a resident of Canada throughout the year. The Canada Revenue Agency (CRA) also considers you to be a resident, for the purpose of this deduction, if you were resident in Canada for part of the year and the previous or the following tax year.

 

Where do I claim this?

Follow these steps in H&R Block’s tax software to file your 2015 taxes:

  1. Click the PREPARE tab.
  2. Click the YOUR YEAR IN REVIEW icon. You will find yourself here:
  3. Click the checkbox labelled I had investments.
  4. Scroll to the bottom of the page and click Continue.
  5. Click the RRSPS AND INVESTMENTS icon. You will find yourself here:
  6. Under the BOUGHT/SOLD SECURITIES OR OTHER PROPERTY heading, click the checkbox labelled Calculation of capital gains deduction (T657).
  7. Scroll to the bottom of the page and click Continue.

When you arrive at the page for Calculation of capital gains deduction (T657), enter your information into the tax software.

 

Where can I learn more?