Complete this form if you are claiming a capital gains deduction for the current tax year. The deduction applies to capital gains realized on qualified farm property:
- qualified farm or fishing property (QFFP) or qualified small business corporation shares (QSBCS) disposed of in 2017;
- qualified farm or fishing property or qualified small business corporation shares disposed of before 2017 and for which a reserve was claimed in 2017;
- qualified farm property (QFP) or qualified fishing property (QXP) disposed of before 2014 and for which a reserve was claimed in 2017.
You can claim the deduction, if you were resident in Canada throughout 2017. You can also claim the deduction if you ceased to reside in Canada in 2017 but were resident in Canada throughout 2016, or if you began residing in Canada in 2017 and expect to be resident in Canada throughout 2018.
In 2014, qualified farm property and qualified fishing property were grouped into a single category: qualified farm or fishing property. As a result, a capital gains deduction applies to property disposed of after 2013 and used primarily in the course of carrying on a farming business, a fishing business, or both.
You must enclose this form with your 2017 income tax return, along with a copy of any document you sent the Canada Revenue Agency (CRA) concerning the capital gains deduction on qualified property, in particular form T657, Calculation of Capital Gains Deduction, and your federal income tax return.
You must send us all the documents by the later of the following dates:
- the 30th day following the day on which you claimed the capital gains deduction with the CRA; or
- the deadline for filing your income tax return for the taxation year for which the deduction form must be filed with the CRA.
If you do not provide a copy of the documents you sent the CRA by the deadline, you will be liable to a penalty of $25 per day, up to a maximum of $2,500.
In addition, your cumulative net investment loss (CNIL) at the end of 2017 may limit the taxable capital gains deduction to which you are entitled. To determine your CNIL, complete Form TP-726.6-V, Cumulative Net Investment Loss.
Maximum capital gains deduction on qualified property
Capital gains deduction on qualified farm or fishing property
The cumulative maximum of the capital gains deduction that is applicable to gains realized on the disposition of qualified farm or fishing property after December 31, 2014, has been increased from $800,000 to $1 million.
The same limit also applies to reserves in respect of such property disposed of after December 2, 2014. For more information, see the guide entitled Taxable Capital Gains (IN-120-V).
Qualified small business shares
The cumulative maximum of the capital gains deduction resulting from the disposal of qualified small business shares has been increased from $750,000 to $800,000 in 2014 to be indexed commencing in 2015. As a result, in 2015, the capital gains deduction limit increased from $800,000 to $813,600. In 2016, the limit was $824,176 and in 2017 taxation year it is $835,716.
The total capital gains deduction cannot exceed the cumulative maximum of the capital gains deduction, which is determined according to progressive ceilings based on the type of qualified property (or the reserve related to the property) and the date of disposition.
Qualified property that is resource property
If you realized a capital gain on qualified property that is resource property and you wish to claim a deduction in respect of that capital gain, you must first complete this form to claim a capital gains deduction on qualified property. Once the cumulative maximum of the capital gains deduction on qualified property has been reached, you may then complete form TP-726.20.2, Capital Gains Deduction on Resource Property, to claim a deduction for the portion of the capital gains you were unable to deduct in this form.
For more information, consult Capital Gains and Losses (IN 120-V), available at https://www.revenuquebec.ca/en/.
See Also