Capital Gains Deduction  

• Identify requirements for claiming a capital gains deduction.¹
• Define an eligible small business corporation.²
• Define eligible small business corporation shares.³

• Define eligible individuals who may claim a capital gains deduction.⁴

• Define qualified properties for the capital gains deduction.
• Qualified small business corporation shares⁵
• Qualified farm property⁶
• Qualified fishing property⁷
• Identify the maximum amount of the current capital gains deduction limit.⁸
• For qualified small business corporation shares
• For qualified farm property
• For qualified fishing property 
• Identify amounts that limit a taxpayer’s claim for the capital gains deduction, such as: 
• Cumulative net income loss
• Allowable business investment loss
• Previously used amount of the capital gains deduction 
• Determine the factors to consider in determining the amount of the capital gains deduction that should be claimed, such as:
• Remaining availability of capital gains deduction
• Availability of capital losses
• Current marginal tax rate
• Expected marginal tax rate based on amount of capital gains deduction claimed
• Future need for capital gains deduction
• Cash flow needs
• Impact of Alternative Minimum Tax
• Impact on asset’s adjusted cost basis 
• Explain methods that may be used to maximize the capital gains exemption.

• Explain the income tax impact to an individual from claiming the capital gains deduction.

 Deferral of Capital Gains / Capital Gains Reserve   

• Explain circumstances where capital gains may be deferred, such as:
• When capital property is transferred to a spouse or common-law partner
• When capital property is transferred to the surviving spouse, common-law partner or qualifying spousal or common-law partner trust of a deceased taxpayer
• When capital property is transferred to an alter ego or joint partner trust by a taxpayer
• When capital property is transferred to a corporation by a taxpayer who is or becomes a shareholder of the corporation
• When capital property is transferred to a partnership by a taxpayer who is a partner or receives an interest in the partnership
• When an inter vivos transfer of farm property occurs between a taxpayer and their child or at death, subject to certain limitations
• When shares of a Canadian small business corporation are disposed of and the proceeds of the shares are reinvested into another Canadian small business corporation 
• Define a capital gains reserve.⁹
• Explain requirements for claiming a capital gains reserve,¹⁰ such as:
• Holding period of eligible small business corporation shares
• Maximum period over which the deferral may be claimed
• Maximum time frame for acquisition of replacement property

• Identify that the capital gains reserve may not be claimed upon the death of an individual.  
• Explain the income tax treatment on deferred capital gains on a transfer of capital property. 
• Explain circumstances when income attribution may still apply despite capital gains being deferred, such as:
• Transfer of capital property to a spouse or common-law partner 
• Transfer of capital property to a child 
• Determine the factors to consider in determining the timing and amount of the capital gains reserve that should be claimed, such as:
• Amount of sale proceeds not yet received
• Availability of capital losses
• Current marginal tax rate
• Expected marginal tax rate if full gain was realized in one year 
• Future expected marginal tax rates in years that gain could be spread over 
• Cash flow needs
• Type of asset sold
• Legislated government amount

 Principal Residence Exemption  

• Identify criteria for a property to qualify as a principal residence in Canada.¹¹
• Identify that a process exists for claiming the principal residence exemption.  
• Identify housing units that may qualify as a principal residence.¹²
• Explain the principal residence exemption for Canadian residents for a property located in Canada.¹³
• Explain rules associated with designating multiple properties as principal residences in Canada.¹⁴
• Estimate the principal residence exemption that a taxpayer may claim.  
• Determine the factors to consider in determining the amount of the principal residence exemption that should be claimed when two or more properties qualify for the exemption, such as:
• Current marginal tax rate
• Capital gain on each property
• Length of ownership of each property
• Future use of remaining property(ies)
• Expected growth in remaining property(ies)
• Availability of capital losses that may be applied against property(ies)
• Cash flow needs