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York University (12,359)
ADMS 3520 (42)

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York University
Administrative Studies
ADMS 3520
Thaddeus Hwong

Capital Gains - defined as gains on disposal of capital property (assets) - capital assets are assets which are capable of earning income in the form of business profits, interest, dividends, rents or royalties Special Rules - Assets purchased before 1972 - Assets purchases after 1971 - Principal Residence - Personal Use Property - Listed Personal Property - Capital Gain Reserves Taxable Capital Gains - calculated as: Proceeds of Sale - Cost of asset sold = Capital Gain Taxable Capital Gain = 50% of Capital Gain Allowable Capital Losses = 50% of Capital Loss - these can be applied against taxable capital gains Asset purchased before 1972 - there was no capital gains tax before 1972 - all assets owned at December 31, 1971 are valued at that date. This is called their V-day value. - for the sale of assets owned at December 31, 1971, there are two methods to calculate the capital gain. These are the median rule and the V-day valuation method. Median Rule - ACB of the asset sold is the middle value between cost, V-day value and proceeds. V-day Valuation Method - ACB of asset sold is the V-day value of the asset. Sale of Shares – after 1971 purchases Identical Properties - Cost of shares disposed of is determined by the weighted average cost method as follows: Royal Bank shares Date Purchased 1996 1000 shares @ $50 1998 900 shares @ $54 1999 1100 shares @ $55 Calculation of cost: 1000 x $50 = 50,000 ACB = 159,100 900 x $54 = 48,600
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