This course has been designed as a comprehensive review of the taxation of capital gains in Canada. You should already have a basic knowledge of the subject. The course will provide you with the knowledge to distinguish between income and capital transactions and, once that is determined, to make all the calculations required to correctly report the capital gain.

Because the subject of capital gains is very broad, it is not possible to cover every eventuality in a five-module course. However, it is hoped that this course will provide you with the tools to carry out research in areas not specifically covered here. As well, you are encouraged to review other courses in the Comprehensive Tax Study Series, such as Section 85: Property Transfers to a Corporation, and Income Taxes at Death.

The course is based on the Income Tax Act (ITA) as it stood on February 4, 2011. Any pending legislative amendments, pronouncements, or proposals announced up to then have been incorporated into these materials.  Also included are relevant measures announced in the March 22, 2011 federal budget and reintroduced in the June 6, 2011 budget.  You are expected to have a current Income Tax Act to refer to, as some of the ITA references included in these materials have been paraphrased or merely cited, and you will want to refer to the actual provisions to build your comprehension.

The course is divided into five modules. Each module ends with a topic point summary which highlights the main points of that module. Also, there are two online quizzes to test your understanding of the concepts: Quiz 1 follows Module 3, and Quiz 2 follows Module 5.

Module 1: Overview and general principles
History
Valuation Day values
Capital versus income transactions
Taxable capital gains and allowable capital losses
Tax avoidance and evasion
Topic point summary

Module 2: Determination of capital gains and losses
Dispositions [§248(1)]
Proceeds of disposition
Adjusted cost base
Selling expenses
Reserves
Stop loss rules
Eligible capital property
Charitable donations of capital properties
Topic point summary

Module 3: Special rules governing capital gains and losses
Property taxes and interest
Restricted farm losses
Allocation of proceeds
Inadequate considerations
Gifts and bequests
Attribution rules
Property passing on death
Emigration and immigration
Sale of taxable Canadian property by a non-resident
Topic point summary

Quiz 1

Module 4: More special rules governing capital gains
Personal-use property
Listed personal property
Principal residence
Changes of use
Replacement property: Involuntary dispositions
Replacement property: Voluntary dispositions
Replacement property: Small business corporation shares
Identical properties
Adjusted cost base of mutual fund units
Partial dispositions
Options
Government grants and assistance
Capital property acquired as prizes
Topic point summary

Module 5: Business investment losses, capital gains deduction, and other related areas
Business investment losses
Lifetime capital gains deduction
Small business corporation becoming public
Topic point summary

Quiz 2

This course has been updated by Victor Waese, MBA, CGA. Victor is an instructor of Financial Management at British Columbia Institute of Technology, and since departing from public practice has been involved in the tax education field with BCIT, CMA, and CGA.

The originally author of this course, Don Goodison, CFP, FCGA, has appeared on behalf of CGA-Canada at the House of Commons Finance Committee hearings and is a former member of the CGA-Canada Budget Task Force. In 2000 Don was awarded a Life Membership by CGA BC.