Capital gains or losses arising from the disposition of foreign property
Capital gains realized or foreign capital losses must be entered in Schedule 6. To indicate that the capital gain or loss is from a foreign source, select the check box in the column FS on the appropriate row in the relevant section. The eligible portion of these capital gains or losses will be updated to lines 1.1 and 2.1 respectively in column B, Foreign investment income in Part 3A, “Canadian and foreign investment income and adjusted aggregate investment income calculation,” of Schedule 7, Aggregate Investment Income and Income Eligible for the Small Business Deduction (Jump Code: 7).
Property other than an active asset
Capital gains or losses arising from the disposition of a property other than an active asset allow you to calculate the adjusted aggregate investment income in Schedule 7. An active asset is defined under subsection 125(7) ITA as:
- a property that is used primarily in an active business carried on in Canada by the corporation or by a Canadian-controlled private corporation that is related to the corporation;
- a qualified small business corporation share (as defined in subsection 110.6(1) ITA, by replacing “individual” with “corporation”) of a corporation connected with the corporation.
- an interest equal to or greater than 10% of the total interest in a partnership whose property corresponds to the criteria for letters a) or b) above.
To indicate whether the capital gain or loss arises from a property other than an active asset, select the check box of column PA in the relevant section. The eligible portion of these capital gains or losses will be updated to lines 1.1 and 2.1 respectively of column C, Adjusted aggregate investment income under Part 3A in Schedule 7.
For more information on the adjusted aggregate investment income calculation, consult the help topic for Schedule 7.
Transfer from Schedule 6 into Form T1135*
A transfer of data from Schedule 6 into Form T1135 can be made when the property subject of a disposition is specified foreign property that is part of the following classes:
- Shares;
- Real estate;
- Bonds;
- Other properties.
In order for the program to transfer the data, select the following box:
Then, in the Transfer to T1135 list, select the section of Form T1135 into which the income should be transferred.
The data transferred is the description, country code and the income (loss)/gain (loss) on disposition.
* Note that no data is transferred if Part A, “Simplified reporting method,” has been completed in Form T1135.
For more information, consult the Help with respect to Form T1135.
See also