1994 Capital Gains Election (a BLAST from the Past)
Recently, we have prepared a number of personal tax returns for clients who owned property that was acquired before 1994. The property could be land, cottage property, artworks, securities and rental property. Way back in 1994 the government eliminated the general lifetime $100,000 capital gains exemption on most capital assets. To compensate for the elimination and to ensure that anyone who had property and didn’t sell it would still get their benefit, Revenue Canada (now CRA) allowed a one-time election (using form T664) that permitted taxpayers to “bump up” the tax cost of the property by a maximum of $100,000. The election was filed to ensure that future tax liabilities would be minimized.
In some of the cases that we have dealt with, our clients can’t remember whether they filed the election and in others, we have prepared terminal tax returns for deceased taxpayers. Their heirs didn’t know whether the election had been made, and in some cases were unaware that an election may have been made. If you still own property that you made an election on in 1994, please make sure that you have a copy of your 1994 return available, and that the executors of your estate are aware of it. This is important to ensure that the tax planning you did back in 1994 will be effective.
If you do not have a copy of your 1994 return, you can request a copy by calling the CRA at 1-800-959-8281. Ensure that you specify that you need form T664 from 1994 so they don’t send just a summary. When calling, you should have a copy of your most recent tax return with you so that CRA can verify your identity.
Since there are many considerations when disposing of property that has been held since before 1992 we recommend that you speak with a tax advisor to reduce your risk of over-paying income tax.
Jerry Paskowitz, CPA, CA, CMC, is a Partner with Sloan Partners with over 30 years’ experience in all tax and financial matters. Get in touch with Jerry by email or phone 416-649-7702 for an appointment to discuss tax savings opportunities and financial strategy for your business.