Schedule 3 Tax Form: Capital Gains or Losses in Canada

When do I have to use the CRA’s Schedule 3?

The Schedule 3 tax form is used to declare capital gains or losses. 

What are capital gains and losses?

You make capital gains when you sell or dispose of capital property. Capital property represents assets that can appreciate (gain) or depreciate (loss) in value. Those assets can include physical property like real estate, or other types of property like shares, mutual funds, etc. 

Capital losses represent the amount of money you lost when you sold or disposed of capital property. Normally, capital losses are only used to reduce capital gains. They cannot be used to reduce other income.  Capital losses that you do not use in the current year can be carried back to any of the 3 preceding tax years by using form T1A or carried forward indefinitely to reduce capital gains. 

Are those amounts indicated on some type of information slip?

Most of your gains or losses are indicated on a T4PS, T5, T5013, T5013A, T5008, T3 or on an account statement. 

How do I declare my gains and losses?

Indicate the amount of gain or loss on your CRA Schedule 3 on: 

  • qualified small business corporation shares;
  • qualified farm property and qualified fishing property;
  • publicly traded shares, mutual fund units, deferral of eligible small business corporation shares, and other shares;
  • real estate, depreciable property, and other properties
  • bonds, debentures, promissory notes, and other similar properties; and
  • other mortgage foreclosures and conditional sales repossessions. 

Indicate the gain only on personal-use property and listed personal property (LPP). 

How is the amount I put into my return calculated?

Gains

If the total of your gains for the year is more than your losses (positive result on line 197), you will include the amount on line 199 on line 127 of your return. It represents 50% of the difference between gains and losses and will be added to your income. 

Losses

If the total of your losses for the year is more than your gains (negative result on line 197), do not include the amount on line 199 on line 127 of your return. The CRA will keep track of it and your net losses will appear on your Notice of Assessment statement.  

Please consult Guide T4037 for more detailed information. Click here for Schedule 3.

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