AFM362 Lecture Notes - Lecture 13: Capital Loss, Tax Deferral
29 Jun 2018
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Department
Course
Professor
The latest inclusion rate is "after October 17, 2000: 50%"
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A capital gain is the amount by which proceeds of disposition exceed the ACB and any disposition
costs on the sale of capital property
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Capital gains are included in a taxpayer's income based on the inclusion rate for the period
Terminology at full value and at taxable value
100%
50%
Capital gain
Taxable capital gain
Capital loss
Allowable capital loss
Business investment loss
Allowable business investment loss
Capital gains exemption
Capital gains deduction
Proceeds of disposition: broader term than "selling price" because it includes deemed proceeds
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Adjusted cost base ACB: selling costs are not included in the adjusted cost base, hence, may give
rise to a capital loss
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Exemption or reserve: deducted from "gain" to arrive at the capital gain.
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One pertains to a principal residence (a permanent exemption)
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Other provides a reserve for amounts not due in the year (a tax deferral)
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Two major exemptions:
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Taxable capital gain (allowable capital loss): the portion of the capital gain (capital loss) taken into
income. The inclusion rate is 50%
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More terminologies
Any depreciable property
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Any other property that would result in a capital gain or loss upon disposition
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e.g. shares, investments, real estate, art, a machine, house, cottage, another personal
property
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Generally an asset that provides the owner with a long
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term and enduring benefit
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Capital property
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defined
Income vs capital
Different treatment for intent of using something as capital or resale as inventory
Paragraph 3b) contains the income inclusion provision requires "net taxable capital gains" to be included
in the calculation of net income
The total in subdivision c of the aggregation formula cannot be negative (see top part of page
360)
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Different rues for different types of capital property
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Net capital gains are distinguished from net listed personal property (LPP) gains and allowable
capital losses
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Subdivision c in Dividend B of Part I of the Act outlines the rules related to capital gains and losses
Personal use property (PUP)
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Listed personal property (LPP)
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Other capital property
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Categories of capital property
Chapter 7 Capital gains: personal
February 4, 2018 9:50 PM
AFM 362 Page 1
Document Summary
Capital gains are included in a taxpayer"s income based on the inclusion rate for the period. The latest inclusion rate is "after october 17, 2000: 50%" A capital gain is the amount by which proceeds of disposition exceed the acb and any disposition costs on the sale of capital property. Terminology at full value and at taxable value. Proceeds of disposition: broader term than "selling price" because it includes deemed proceeds. Adjusted cost base acb: selling costs are not included in the adjusted cost base, hence, may give rise to a capital loss. Exemption or reserve: deducted from "gain" to arrive at the capital gain. One pertains to a principal residence (a permanent exemption) Other provides a reserve for amounts not due in the year (a tax deferral) Taxable capital gain (allowable capital loss): the portion of the capital gain (capital loss) taken into income. Any other property that would result in a capital gain or loss upon disposition.
