T657 – Calculation of Capital Gains Deduction

The following instructions are taken from the form.

Use this form to calculate your capital gains deduction on line 25400 of your return if:

  • You disposed of qualified farm or fishing property (QFFP) or qualified small business corporation shares (QSBCS) in 2024

  • You are reporting an amount from a 2023 reserve in 2024 from the disposition of QFFP or QSBCS

For definitions of qualified farm or fishing property and qualified small business corporation shares, see Guide T4037, Capital Gains.

Note
You must be a resident of Canada throughout 2024 to be eligible to claim the capital gains deduction. For the purpose of this deduction, you are deemed to be a resident throughout 2024 if you were a resident of Canada at any time in 2024 and throughout 2023 or 2025.

Deferred capital gains from the disposition of QSBCS do not qualify for this deduction and should have been reported at lines 10689, 10690, 13199, and 13200 instead of lines 10683, 10684, 10699 and 10700 (for more information see Guide T4037, Capital Gains).

Before you start

Complete Schedule 3, Capital Gains or Losses, to report the disposition of QFFP, QSBCS or the inclusion of a reserve amount from prior-year dispositions of QFFP or QSBCS, and to calculate your taxable capital gain or loss for 2024.

Complete Form T2017, Summary of Reserves on Dispositions of Capital Property, if you are reporting a reserve claimed on your 2023 return or are claiming a reserve for 2024.

Complete Form T936, Calculation of Cumulative Net Investment Loss (CNIL) to December 31, 2024, if you have investment income or investment expenses in 2024. Form T936 lists the components of investment income and expenses for the purpose of calculating your CNIL.

To get these forms, go to canada.ca/cra-forms-publications.

For 2024, there are two lifetime capital gains exemption (LCGE) limits:

  • For dispositions in Period 1 from January 1 to June 24, 2024, the limit is $1,016,836.

  • For dispositions in Period 2 from June 25 to December 31, 2024, the limit is $1,250,000.

If you disposed of QFFP, QSBCS, or claimed a reserve for a disposition of QFFP or QSBCS in a previous tax year you may be eligible for the LCGE.

For dispositions of QFFP or QSBCS at any time in 2024, only half of the capital gain is included in your taxable capital gains, so the cumulative capital gains deduction is limited to half of the LCGE amount available.

For dispositions of QFFP after April 20, 2015 and before January 1, 2024, the LCGE is increased to $1,000,000. This additional deduction does not apply to dispositions of QSBCS. There is no additional deduction for QFFP in 2024.

Capital gains deduction limits on dispositions of qualifying capital property for 2015 to 2024

Year of disposition

Lifetime capital gains deduction limit

2015

$406,800 (1/2 of $813,600)

2016

$412,088 (1/2 of $824,176)

2017

$417,858 (1/2 of $835,716)

2018

$424,126 (1/2 of $848,252)

2019

$433,456 (1/2 of $866,912)

2020

$441,692 (1/2 of $883,384)

2021

$446,109 (1/2 of $892,218)

2022

$456,815 (1/2 of $913,630)

2023

$485,595 (1/2 of $971,190)

2024

Period 1: $508,418 (1/2 of $1,016,836)

Period 2: $625,000 (1/2 of $1,250,000)

For more information, see "Claiming a capital gains deduction" in Guide T4037, Capital Gains.

When you dispose of QFFP or QSBCS and realize a capital gains deduction, you can claim a capital gains deduction in 2024 that is equal to whichever of the following amounts is the least:

  • your annual gains limit for 2024
  • your cumulative gains limit for 2024
  • your net taxable capital gains reported in 2024 from dispositions of QFFP or QSBCS, or if you are reporting a reserve in 2024 from the disposition of qualifying capital property
  • your maximum capital gains deduction available for 2024

There is an election available if you own shares of a qualifying small business corporation that stops being a small business corporation for one of the following reasons:

  • a class of its shares is listed on a designated stock exchange
  • after 1999, a class of another corporation’s shares is listed on a designated stock exchange

This election allows you to report a taxable capital gain on your income tax and benefit return and claim up to $508,418 for the dispositions before June 25, 2024 and up to $625,000 for dispositions after June 24, 2024 for the capital gains deduction, even though you did not actually sell your shares. The deduction applies to any gain you have on these shares up to the date the shares are listed. To make this election, complete Form T2101, Election for Gains on Shares of a Corporation Becoming Public. To get this form, go to canada.ca/cra-forms-publications.

If you are a beneficiary of a trust and received a 2024 T3 slip from the trust with an amount reported in box 30, you may include this amount when calculating your capital gains deduction, as noted below.

The amount in box 30 represents the capital gains from dispositions of QFFP or QSBCS by the trust that occurred in 2024 or relates to a capital gains reserve claimed by the trust in a previous year.

If the disposition occurred in the current tax year of the trust, boxes 54 to 57 on the T3 slip will indicate what portion of the box 30 amount relates to dispositions of QFFP or QSBCS and whether the gain is for a disposition that occurred in Period 1 or Period 2. Capital gains realized by the trust and allocated to you in 2024 are included in the amount on line 10684 or line 10686 for Period 1, and line 10700 or line 11000 for Period 2 of Schedule 3, as applicable. To calculate your capital gains deduction, complete the Period 1 or Period 2 parts of "Chart 2024 – Capital gains deduction", as applicable.

If the disposition occurred in one of the four preceding tax years of the trust, the footnote area of the T3 slip will indicate that the gain reported in box 30 is from the disposition of QFFP or QSBCS, and the year that the trust disposed of the property. These gains should not be included on "Chart 2024 – Capital gains deduction". Complete the applicable charts for the 2020 to 2023 years (as determined in Step 3a, based on the trust's year of disposition).

Example

You received a 2024 T3 slip for a trust. The footnotes area indicates that the capital gain shown in box 30 is from the disposition of QFFP that occurred in 2021. Based on the questions in Step 3a, complete Part 1 and Part 2 of "Chart 2021 – Capital gains deduction.

See Also

Schedule 3 – Capital Gains or Losses

Federal Income Tax and Benefit Guide – Line 25400

Guide T4037 - Capital Gains