Schedule 6. Capital Gains and Losses
Schedule 6 (T2SCH6) summarizes dispositions of capital property during the tax year and computes taxable capital gains, allowable capital losses, and the capital dividend account credit.
Definition
Schedule 6 (T2SCH6), "Summary of Dispositions of Capital Property," is the corporate equivalent of the individual Schedule 3. It reports dispositions of capital property (shares, bonds, real estate, depreciable assets sold above UCC, personal-use property) and calculates the taxable capital gain (TCG) or allowable capital loss (ACL) for the year. The result flows to line 113 of .
File Schedule 6 in any year the corporation disposes of capital property, receives a deemed disposition, or needs to claim the capital gains reserve under s.40(1)(a)(iii). The schedule also generates the non-taxable half of a capital gain, which is the primary source of credits to the .
Key rules
Inclusion rate (2026): Under the rules in effect for 2026, the capital gains inclusion rate remains 50% for corporations. A capital gain is half taxable, half credited to the CDA; a capital loss is half deductible (allowable capital loss), half denied. See for the 2024 draft changes that were subsequently withdrawn.
Categories reported on Schedule 6:
- Part 1: Qualified small business corporation shares (limited relevance corporately since the s.110.6 capital gains exemption is for individuals).
- Part 2: Qualified farm or fishing property.
- Part 3: Real estate, depreciable property, and other capital property.
- Part 4: Bonds, debentures, promissory notes, and similar obligations.
- Part 5: Shares of corporations (other than those in Part 1).
- Part 6: Personal-use property.
- Part 7: Listed personal property.
- Part 8: Capital gains reserve under s.40(1)(a)(iii) (up to 5 years).
Superficial loss rule (s.54): A loss is denied if the corporation (or affiliated person) acquires identical property within 30 days before or after the disposition and holds it at the end of that window.
Example
Oakwood Holdings Ltd. sold shares of a public company during 2026:
Common mistakes
Recording the book gain on Schedule 1 line 113. Line 113 is the taxable capital gain from Schedule 6 (50%), not the full accounting gain. The full book gain is reversed on line 417 of Schedule 1.
- Forgetting to update the CDA balance for the non-taxable portion. Without a Schedule 89 election, the pool is wasted.
- Netting gains and losses improperly. Allowable capital losses only offset taxable capital gains, never ordinary income (see ).
- Treating recapture on depreciable property as a capital gain. Recapture is ordinary income on ; only proceeds exceeding original cost produce a capital gain.
- Missing the superficial loss denial on tax-loss selling within 30 days.
Related concepts
Authority
- CRA Form T2SCH6
- Income Tax Act s.38
- Income Tax Act s.39
- Income Tax Act s.40
- Income Tax Act s.89(1) (CDA)
See also
Related entries
Capital Dividend Account (CDA)
The Capital Dividend Account is a notional tax pool of a private corporation that allows certain amounts, primarily the non-taxable half of capital gains and life insurance proceeds, to be paid to shareholders as tax-free capital dividends.
Capital Gains Inclusion Rate
Only a portion of a realized capital gain is included in income; the inclusion rate has historically been 50% but is subject to legislative change.
Schedule 4. Corporation Loss Continuity
Schedule 4 (T2SCH4) tracks the continuity and application of non-capital losses, net capital losses, farm losses, restricted farm losses, and limited partnership losses across tax years.
Schedule 1. Net Income for Tax
Schedule 1 (T2SCH1) reconciles a corporation's accounting net income to its net income for tax purposes by adding back non-deductible items and subtracting tax-only deductions.
This entry is for general reference. It does not constitute professional tax advice. Consult a qualified Canadian accountant for your specific situation.