T657: Calculation of Capital Gains Deduction

If you’re a Canadian resident*, you can use form T657 to calculate your capital gains deduction for any taxable capital gains that resulted from:

  • Dispositions (sale or transfer) of qualified farm or fishing property (if you disposed of them in 2020)
  • Dispositions of qualified small business corporation shares (if you disposed of them in 2020), or
  • Reserves added to your 2020 income, from dispositions made in a previous year

*For the purposes of the capital gains deduction, the Canada Revenue Agency (CRA) considers you to be a Canadian resident if you lived in Canada for part of 2020 and throughout 2019 or 2021. If you were a non-resident when you disposed the above properties, you can’t claim the capital gains deduction.

When you dispose of any of the above properties (in other words, when you sell or transfer it to someone else), and have a capital gain, you can claim a capital gains deduction that’s equal to the lowest of the following amounts:

  • Your capital gains limit for the year
  • Your cumulative capital gains limit for the year
  • The net taxable capital gains that you reported in 2020 from the disposition of qualified farm or fishing property or qualified small business corporation shares or
  • Your maximum capital gains deduction available for the year

If you need more information, check out the “Claiming a capital gains deduction” section of Guide T4037: Capital Gains.